Anonymous wrote:

Anonymous wrote:Historical returns are 8%. The past decade or so has been closer to 12% annualized. So, with mean reversion, you could conservatively plan to see 4-5% annualized for the next bit. That would be in a 100% stock portfolio.

Um, actually from 2009 to 2021, the stock market grew by over 17% on average per year. If you assume mean reversion to the historical level of 9%, that means more than a decade of 1% returns. And by the way, that one percent is nominal, so after inflation, approximately -2% returns for the next decade from the stock market. Excited yet?

Recency bias

The market goes up and down.

Anonymous wrote:

Anonymous wrote:inflation is old news..forward looking at it will be quite modest.

Why are you assuming it will be 4% for the next 20 years..no one has a clue

Historically, the S&P is around 9-10 depending on the time frame. 6-8 is reasonable and fair. Anything less that than and people are acting out of fear/short term bias.

People said this in the 70s, 80s, 90s, etc...you know what? the S&P has still grown exponentially.

That's not real return though. Historical S and P of 9-10% is nominal.

Assume 2.5 - 3% inflation over the next 25 years..I said 9-10 is the historical norm so 6-8 is a reasonable real return

6% return - 2.5% inflation = 4.5% conservative add 2% if things turn out better.

Anonymous wrote:inflation is old news..forward looking at it will be quite modest.

Why are you assuming it will be 4% for the next 20 years..no one has a clue

Historically, the S&P is around 9-10 depending on the time frame. 6-8 is reasonable and fair. Anything less that than and people are acting out of fear/short term bias.

People said this in the 70s, 80s, 90s, etc...you know what? the S&P has still grown exponentially.

That's not real return though. Historical S and P of 9-10% is nominal.

For the purposes of wondering if we're saving enough, I typically run the various calculators online estimating either a 5 or 6 percent annual return on investments. Feels conservative enough that I won't be fooled into saving less, and I don't really care if I wind up saving more than I need, because I could always just give it away (or spend it) later.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Historical returns are 8%. The past decade or so has been closer to 12% annualized. So, with mean reversion, you could conservatively plan to see 4-5% annualized for the next bit. That would be in a 100% stock portfolio.

Um, actually from 2009 to 2021, the stock market grew by over 17% on average per year. If you assume mean reversion to the historical level of 9%, that means more than a decade of 1% returns. And by the way, that one percent is nominal, so after inflation, approximately -2% returns for the next decade from the stock market. Excited yet?

You cherry picked that data starting with 2009.. should 1991 - 2021 or 2001 - 2021 and it's more normal.

People can manipulate numbers to fit whatever view they have but data doesn't like. Long term, returns will be good as they've been the last 50 years.

Fine, you want to do a full 20-year period? We'll do 2001-2021. We already talked about the 2009-2021 period, so let's look at 2001-2009. From January 2001 to January 2009, the S&P 500 went from about 1350 to 850. That is a -5.8% growth rate for eight years before factoring in inflation. After inflation, we're at like -8% for eight years. No one is saying the market is permanently dead, but if you think the stock market can't return 0% or -2% for the next 10 years, watch out.

look at foreign stocks, bonds, etc during those time frames..it’s different.

Plus 10yr is short term in the grand scheme of investing ..op was asking about 20-25 years. There are no 25yr time periods that were poor. I study this for my career. Of course one segment of the market can go out of favor for 5-10 years. It happens more than people think. Hence why you diversify.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Historical returns are 8%. The past decade or so has been closer to 12% annualized. So, with mean reversion, you could conservatively plan to see 4-5% annualized for the next bit. That would be in a 100% stock portfolio.

Um, actually from 2009 to 2021, the stock market grew by over 17% on average per year. If you assume mean reversion to the historical level of 9%, that means more than a decade of 1% returns. And by the way, that one percent is nominal, so after inflation, approximately -2% returns for the next decade from the stock market. Excited yet?

You cherry picked that data starting with 2009.. should 1991 - 2021 or 2001 - 2021 and it's more normal.

People can manipulate numbers to fit whatever view they have but data doesn't like. Long term, returns will be good as they've been the last 50 years.

Fine, you want to do a full 20-year period? We'll do 2001-2021. We already talked about the 2009-2021 period, so let's look at 2001-2009. From January 2001 to January 2009, the S&P 500 went from about 1350 to 850. That is a -5.8% growth rate for eight years before factoring in inflation. After inflation, we're at like -8% for eight years. No one is saying the market is permanently dead, but if you think the stock market can't return 0% or -2% for the next 10 years, watch out.

Anonymous wrote:

Anonymous wrote:Historical returns are 8%. The past decade or so has been closer to 12% annualized. So, with mean reversion, you could conservatively plan to see 4-5% annualized for the next bit. That would be in a 100% stock portfolio.

Um, actually from 2009 to 2021, the stock market grew by over 17% on average per year. If you assume mean reversion to the historical level of 9%, that means more than a decade of 1% returns. And by the way, that one percent is nominal, so after inflation, approximately -2% returns for the next decade from the stock market. Excited yet?

You cherry picked that data starting with 2009.. should 1991 - 2021 or 2001 - 2021 and it's more normal.

People can manipulate numbers to fit whatever view they have but data doesn't like. Long term, returns will be good as they've been the last 50 years.

7 like every other 20-25 years ever.

11% minus inflation.

Anonymous wrote:Historical returns are 8%. The past decade or so has been closer to 12% annualized. So, with mean reversion, you could conservatively plan to see 4-5% annualized for the next bit. That would be in a 100% stock portfolio.

Um, actually from 2009 to 2021, the stock market grew by over 17% on average per year. If you assume mean reversion to the historical level of 9%, that means more than a decade of 1% returns. And by the way, that one percent is nominal, so after inflation, approximately -2% returns for the next decade from the stock market. Excited yet?

I think people sometimes don’t realize the power of supply and demand in the markets. Many people’s retirement accounts are in the markets. Lots of demand. But as these people retire, there is an unwinding as they spend their investments. This didn’t happen in previous generations bc retirement fund were pensions paid by the company and not necessarily invested in the markets. This may also be more than offset by free cash that corporations have that they must invest.

I didn’t pride my PhD in economics or finance but if I did this would be the topic of my current research.

Price = the intersection of supply and demand. Not necessarily what an analyst thinks that a company is worth.

Historical returns are 8%. The past decade or so has been closer to 12% annualized. So, with mean reversion, you could conservatively plan to see 4-5% annualized for the next bit. That would be in a 100% stock portfolio.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:less than 5, after tax close to 3. Read what Jack Bogle said on this very topic going forward. Just rolling with an S&P index will not beat inflation

I'm not aware of anywhere that Bogle said inflation would outpace the S&P500 long term-- that would suggest a very bad economy and I think the Fed would do everything in it's power to avoid that.

np - if i remember correctly he said return on investment next decade will be nothing like it's been. i remember thinking, this guy is crazy what does he know... LOL. He was right!

How has he been right? because we had one year of semi bad returns? S&P is up 15% since October, Foreign stocks up 20% +