This chart is from an opinion piece published by James Gibney today on Bloomberg.

It would seem that the younger generation still remains optimistic about remain with over 56% of the 18-37 year bracket expecting a 10% return. It’s no secret that the recent bull market with ample liquidity flowing through the system has rewarded many and consequently propelled expectations to new highs.

But the gravy train is slowing down. With the tapering of bond buying and eventual increase in interest rates, it’s only a matter of time until liquidity becomes tight. Much tighter than we’ve see in the past two years.

We already see a lot of this reflected with more underlying selling the past few days. This is because when there’s ample liquidity, of course it flows everywhere. If you had enough money to spare, you’d probably buy something you wouldn’t ordinarily even consider.

But, this doesn’t mean we’re closing the stock market, and certainly doesn’t mean we can’t make money. It just means companies will have to fight harder for our money. They’ll have to prove themselves. And we will need to be smarter and careful.

I have to admit that even I got lazy at times in researching companies over the last couple of years. Investing / trading companies with even a few hours of work, meant a 5%, 10% and often a 20% return, to say the least.

It was a race to dump your cash into something because you knew that regardless of which company chose, you’d probably end up making money 95% of the time. It won’t be that easy anymore.

That’s not to say we won’t make money. We will but, we’re going to have to be selective. We’re going to have to do the work, stay sharp and invest in good companies.

Short term price action can be excellent opportunities to buy companies at lower prices to hold for the long term. It also means that you can generate alpha by rotating to areas of strength. But, most importantly it means not using the stock market like a casino but, actually learning to invest.