Author Topic: 2% return only in 10 years!?  (Read 12487 times)

mathjak107

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Re: 2% return only in 10 years!?
« Reply #50 on: August 04, 2016, 02:40:30 AM »
Interesting so the worst 30 years In history have been 9% average returns roughly?

Promising and gives me confidence

30 year time frames typically did just fine . but you do have to consider real returns  and whether spending down or not . all the worst case scenario's showed decent 30 year outcomes but you ran out of money at 4% draw rates before 30 years  based on what happened the first 15 years

AlmstRtrd

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Re: 2% return only in 10 years!?
« Reply #51 on: August 04, 2016, 06:03:12 AM »
During the last 150 years, the majority of people had the opinion that there will be no more growth and no more jobs and no more possibilities. Because of the current move into automatisation and artificial intelligence, many boring jobs will be obsolete in the next few years but many new possibilities and jobs will develop. I'm extremely bullish for the world, for my kids and also for the US. Nowadays people can, for example, make more money with a blog than as a director in a big corporation. That means valuable information and knowledge will be paying extraordinary well. We are living in the best moment of the history of mankind and the US is on top of that still one of the very best countries to be.

Again, what another poster sees as a huge positive, I see as a negative, at least for stock prices. Maybe a lot of the jobs that have been lost were in fact boring, but with a broad base of well-paying jobs there were many millions of people that had discretionary income to spend. When interest rates fell dramatically in the early 1980s and stocks took off, a lot of those people jumped on the investing bandwagon and we had the sensational performance of stocks in the 1990s. Since then stocks have done fine if you were able to average in over time. In that case years like 2001-2002 and the late 2008/early 2009 period allowed one to grab shares at a discount (assuming your job wasn't lost in those recessions).

But let's take my situation. I'm almost 58 and easing into early retirement/working part time. My ability to make money in my chosen line of work has been severely diminished by technology (more accurately it has been diminished by the culture that widely-available technology has created). I have no legitimate gripes about that because I had my moment to make and save money and I did a decent - if not spectacular - job of it. Anyway, here I am on the cusp of living off my nest egg and I see the general outlook for stocks as poor. Not everyone is in the position of having a job with a massive salary for years to come. The underlying fundamentals of the stock market right now are important to people in my position.

To my mind the main driver of stock gains since 2009 has been super low interest rates, but that driver has now used up most of its power. Rates may indeed stay low for a long time but flat & low rates are not going to drive stock market gains by themselves. We'd have to see tremendous growth in productivity and profits for stocks to do great over the next 20 years or so.

FWIW, I do have a portion of my investments in stocks. I think that's always prudent just in case I am wrong and they are the best performing investment option over the next 20-30 years.

ooeei

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Re: 2% return only in 10 years!?
« Reply #52 on: August 04, 2016, 06:40:48 AM »
During the last 150 years, the majority of people had the opinion that there will be no more growth and no more jobs and no more possibilities. Because of the current move into automatisation and artificial intelligence, many boring jobs will be obsolete in the next few years but many new possibilities and jobs will develop. I'm extremely bullish for the world, for my kids and also for the US. Nowadays people can, for example, make more money with a blog than as a director in a big corporation. That means valuable information and knowledge will be paying extraordinary well. We are living in the best moment of the history of mankind and the US is on top of that still one of the very best countries to be.

Again, what another poster sees as a huge positive, I see as a negative, at least for stock prices. Maybe a lot of the jobs that have been lost were in fact boring, but with a broad base of well-paying jobs there were many millions of people that had discretionary income to spend. When interest rates fell dramatically in the early 1980s and stocks took off, a lot of those people jumped on the investing bandwagon and we had the sensational performance of stocks in the 1990s. Since then stocks have done fine if you were able to average in over time. In that case years like 2001-2002 and the late 2008/early 2009 period allowed one to grab shares at a discount (assuming your job wasn't lost in those recessions).

But let's take my situation. I'm almost 58 and easing into early retirement/working part time. My ability to make money in my chosen line of work has been severely diminished by technology (more accurately it has been diminished by the culture that widely-available technology has created). I have no legitimate gripes about that because I had my moment to make and save money and I did a decent - if not spectacular - job of it. Anyway, here I am on the cusp of living off my nest egg and I see the general outlook for stocks as poor. Not everyone is in the position of having a job with a massive salary for years to come. The underlying fundamentals of the stock market right now are important to people in my position.

To my mind the main driver of stock gains since 2009 has been super low interest rates, but that driver has now used up most of its power. Rates may indeed stay low for a long time but flat & low rates are not going to drive stock market gains by themselves. We'd have to see tremendous growth in productivity and profits for stocks to do great over the next 20 years or so.

FWIW, I do have a portion of my investments in stocks. I think that's always prudent just in case I am wrong and they are the best performing investment option over the next 20-30 years.

You can find doomsayers going back as long as the market has been around.  If you really think that companies are going to stop being profitable in the near future, then go for outside investments.  I think you'll be hard pressed to find an investment with a much better risk/reward profile than the top 500 companies in the United States.  Starting your own business and real estate may best it, if you know what you're doing, but they're a lot of work.

Radagast

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Re: 2% return only in 10 years!?
« Reply #53 on: August 04, 2016, 08:31:07 AM »
no way are you guaranteed to have a higher value buying in over time .

that is extremely time frame dependent
You are almost guaranteed a higher percentage return on your dollar unless you bought in at an exact low point, but will still usually end with less money than you would have if you put it all in at once. Which is not relevant because most people can't put it all in at once.

TheAnonOne

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Re: 2% return only in 10 years!?
« Reply #54 on: August 04, 2016, 10:31:46 AM »
no way are you guaranteed to have a higher value buying in over time .

that is extremely time frame dependent
You are almost guaranteed a higher percentage return on your dollar unless you bought in at an exact low point, but will still usually end with less money than you would have if you put it all in at once. Which is not relevant because most people can't put it all in at once.

//agree

Most of us are forced to DCA due to receiving paychecks on a set interval. It's just the nature of the beast. I can't take 2017s wages and put them all in on JAN 1st.

Similarly, I won't have a million bucks sitting cash, because I would have to sell my stocks to get that. The whole DCA conversation in itself is somewhat of a mental exercise for the vast majority of MMMers because, unless we got some mega home sale or inheritance, we would never build up such a cash pile.

mathjak107

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Re: 2% return only in 10 years!?
« Reply #55 on: August 04, 2016, 04:16:27 PM »
having no choice but to dollar cost average does not suddenly make that statement about dca being better correct .

how you fund it is up to you . what has shown over and over to work better except for a few time frames still stands .

if dca worked better , when we all hit our desired allocation we would be selling everything and starting from zero again if that were true .

DavidAnnArbor

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Re: 2% return only in 10 years!?
« Reply #56 on: August 04, 2016, 09:19:28 PM »

To my mind the main driver of stock gains since 2009 has been super low interest rates, but that driver has now used up most of its power. Rates may indeed stay low for a long time but flat & low rates are not going to drive stock market gains by themselves. We'd have to see tremendous growth in productivity and profits for stocks to do great over the next 20 years or so.


Aside from some game-changing technologies from the private sector that could help propel future profits and GDP growth, it is possible that the US Congress would finally pass some infrastructure modernization programs, improve education funding and access, and increase basic science research - all of which could help boost productivity and increase the GDP.

mathjak107

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Re: 2% return only in 10 years!?
« Reply #57 on: August 05, 2016, 02:14:52 AM »
earnings estimates were so low that most earnings reports so far are beating estimates , it was the first quarter in the last  six to show an increase in earnings  . consumer spending is holding up well . we are still the best house in the worst neighborhood as far as where to invest .

some other positives were the citi group surprise index shows a big jump up  in expected earnings vs current . low rates also reduce valuations somewhat in comparison to each other .,

« Last Edit: August 05, 2016, 02:27:02 AM by mathjak107 »

AlmstRtrd

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Re: 2% return only in 10 years!?
« Reply #58 on: August 05, 2016, 07:36:44 AM »

To my mind the main driver of stock gains since 2009 has been super low interest rates, but that driver has now used up most of its power. Rates may indeed stay low for a long time but flat & low rates are not going to drive stock market gains by themselves. We'd have to see tremendous growth in productivity and profits for stocks to do great over the next 20 years or so.


Aside from some game-changing technologies from the private sector that could help propel future profits and GDP growth, it is possible that the US Congress would finally pass some infrastructure modernization programs, improve education funding and access, and increase basic science research - all of which could help boost productivity and increase the GDP.

You mean in the form of stimulus spending, correct? I'm not an economist but I happen to think that would be a good thing. The state of our infrastructure is appalling. Anyone on here been to western Europe recently? I was all over Italy last year (admittedly a much smaller country) and was very impressed with the condition of their (visible) infrastructure.

I just don't believe the US Congress will have the political will to pass a package that would be big enough to really stimulate the economy in any meaningful way. We have an 18-trillion-dollar economy. Can Congress pass something that will dedicate trillions of dollars over several years to infrastructure? Back in 2009 Obama was only able to push through a package of 787 billion, most of which went to payments to the unemployed. Very little of it was actually spent on infrastructure... and that was at a moment that almost everyone saw as super critical.

Have to search for figures for what Eisenhower spent on infrastructure improvements, but my guess is that as a percentage of GDP the amount was massive.

TheAnonOne

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Re: 2% return only in 10 years!?
« Reply #59 on: August 05, 2016, 10:50:15 AM »

To my mind the main driver of stock gains since 2009 has been super low interest rates, but that driver has now used up most of its power. Rates may indeed stay low for a long time but flat & low rates are not going to drive stock market gains by themselves. We'd have to see tremendous growth in productivity and profits for stocks to do great over the next 20 years or so.


Aside from some game-changing technologies from the private sector that could help propel future profits and GDP growth, it is possible that the US Congress would finally pass some infrastructure modernization programs, improve education funding and access, and increase basic science research - all of which could help boost productivity and increase the GDP.

You mean in the form of stimulus spending, correct? I'm not an economist but I happen to think that would be a good thing. The state of our infrastructure is appalling. Anyone on here been to western Europe recently? I was all over Italy last year (admittedly a much smaller country) and was very impressed with the condition of their (visible) infrastructure.

I just don't believe the US Congress will have the political will to pass a package that would be big enough to really stimulate the economy in any meaningful way. We have an 18-trillion-dollar economy. Can Congress pass something that will dedicate trillions of dollars over several years to infrastructure? Back in 2009 Obama was only able to push through a package of 787 billion, most of which went to payments to the unemployed. Very little of it was actually spent on infrastructure... and that was at a moment that almost everyone saw as super critical.

Have to search for figures for what Eisenhower spent on infrastructure improvements, but my guess is that as a percentage of GDP the amount was massive.

If memory serves the interstate cost around 3 percent of GDP for years in the 1960s.

nereo

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Re: 2% return only in 10 years!?
« Reply #60 on: August 05, 2016, 12:45:55 PM »

You mean in the form of stimulus spending, correct? I'm not an economist but I happen to think that would be a good thing. The state of our infrastructure is appalling. Anyone on here been to western Europe recently? I was all over Italy last year (admittedly a much smaller country) and was very impressed with the condition of their (visible) infrastructure.

I just don't believe the US Congress will have the political will to pass a package that would be big enough to really stimulate the economy in any meaningful way. We have an 18-trillion-dollar economy. Can Congress pass something that will dedicate trillions of dollars over several years to infrastructure? Back in 2009 Obama was only able to push through a package of 787 billion, most of which went to payments to the unemployed. Very little of it was actually spent on infrastructure... and that was at a moment that almost everyone saw as super critical.

Have to search for figures for what Eisenhower spent on infrastructure improvements, but my guess is that as a percentage of GDP the amount was massive.

If memory serves the interstate cost around 3 percent of GDP for years in the 1960s.
... and NASA gobbled up >3%/year of all federal spending from 1964-1967.  Today we're spending ~1.5% on transportation infrastructure.