I came across this Nikkei 225 chart recently. ( The chart is a month old - ending 15th May 2009)
Since its 1989 highs at just under 40,000, the index is now trading at 1984 -85 levels.
A long term chart can really put things in perspective.
The 1970s, right until the 1989 top were a time of mega multi-bagger equity returns.
This was then followed by 20 years of pain.
Imagine the plight of a Japanese investor who put in money in the Nikkei 225 in 1989 when he was 25 years old!!!!
20 years later, the investor is now in his mid forties and the market is nowhere near the highs and the economy is still stuck in the aftershock of a serious bubble-bust!!
The real estate market is also nowhere near the 1989 highs, so if he invested in a home then, he definitely lost money on that deal as well.
Long term investing is a dangerous idea when you buy in at peak valuations.
As the Japanese example shows, the market can stay irrational longer than you can stay solvent, although in this case, the post 1989 crash was a the most rational event that could have occured.
The above chart also goes to show that monetary policy and government intervention CANNOT solve the problems caused by excessive leverage and speculation.
When you come to today's problems of excessive leverage, speculation, and mind boggling quantitative easing by the USA - 'the central bank currency reserve country', the results are not going to be any different!