Do investments in S&P 500 really double every ~7 years?

[secondcor521]

And that's where it starts to get difficult with investing - volume. You can easily win (or lose) one trade or pick or gamble. But to get to the thousands of data points needed to distinguish from luck, how many individuals have the resources and time to figure that out reasonably early in their investing career?

I think smart investors realize that they don't need to rely solely on their own data points.

[dandarc]

And that's where it starts to get difficult with investing - volume. You can easily win (or lose) one trade or pick or gamble. But to get to the thousands of data points needed to distinguish from luck, how many individuals have the resources and time to figure that out reasonably early in their investing career?

I think smart investors realize that they don't need to rely solely on their own data points.

If they buying broad index funds, I agree with you. Anything departing from that means you're doing something nobody else is doing - even if you're following a strategy from others, how do you judge your individual ability to implement that strategy?

Actually can screw it up even with the basic index fund strategy, but keeping withdrawal needs low and buying / holding are relatively straightforward to understand and implement.

[Wintergreen78]

And that's where it starts to get difficult with investing - volume. You can easily win (or lose) one trade or pick or gamble. But to get to the thousands of data points needed to distinguish from luck, how many individuals have the resources and time to figure that out reasonably early in their investing career?

I think smart investors realize that they don't need to rely solely on their own data points.

If they buying broad index funds, I agree with you. Anything departing from that means you're doing something nobody else is doing - even if you're following a strategy from others, how do you judge your individual ability to implement that strategy?

Actually can screw it up even with the basic index fund strategy, but keeping withdrawal needs low and buying / holding are relatively straightforward to understand and implement.

My personal opinion: if you want to actively trade or buy and hold individual stocks, or take any approach other than buying broad-based indexes and ignoring them, you should track your total performance over time. Not “I bought this one stock and it went up a bunch”, not “I sold a bunch last year before the market went down so I missed that 10% drop”, but “my 3 year returns over my entire portfolio are x% apy, my 5 year returns are y% apy, and my 10 year returns are z% apy”

If you aren’t seriously tracking your performance it is easy to fool yourself that you are cleverer/more lucky than you really are.

[oldtoyota]

In practice it varies - there are 14 year periods without doubling, and then there's 2019-2021 where the market doubled in 3 years.  But on average, stocks earned 10.55%/year since 1972, which works out to doubling every 7 years.

Before you get too optimistic, ask yourself if you like it when people steal your money.  When you have $5,000 and someone robs you of $2,000... because that's what the stock market feels like.  It feels like a robbery, with the money just gone.  To brace for that, I think investors should look at data on past crashes and recoveries.

If you don’t invest money, then it is partly “stolen” by inflation.

[EliteZags]

And that's where it starts to get difficult with investing - volume. You can easily win (or lose) one trade or pick or gamble. But to get to the thousands of data points needed to distinguish from luck, how many individuals have the resources and time to figure that out reasonably early in their investing career?

I think smart investors realize that they don't need to rely solely on their own data points.

If they buying broad index funds, I agree with you. Anything departing from that means you're doing something nobody else is doing - even if you're following a strategy from others, how do you judge your individual ability to implement that strategy?

Actually can screw it up even with the basic index fund strategy, but keeping withdrawal needs low and buying / holding are relatively straightforward to understand and implement.

My personal opinion: if you want to actively trade or buy and hold individual stocks, or take any approach other than buying broad-based indexes and ignoring them, you should track your total performance over time. Not “I bought this one stock and it went up a bunch”, not “I sold a bunch last year before the market went down so I missed that 10% drop”, but “my 3 year returns over my entire portfolio are x% apy, my 5 year returns are y% apy, and my 10 year returns are z% apy”

If you aren’t seriously tracking your performance it is easy to fool yourself that you are cleverer/more lucky than you really are.

also now is not the best time to gauge that since pretty much everyone heavy in tech is up huge, I'm still ~60-70% indexes/ETFs but my total 1/3/5/10yr are all beating the market in this crazy runup, however most of 2022 I was well trailing it as my stocks portfolio was down big but I held through and kept DCA'ing even shifting heavier into the high convictions and my portfolio has roughly doubled in the past year and a half adding 2nd comma early this year, though my stocks are pretty much all 3-5yr+  holds

[GilesMM]

On international stocks - Do you really want to own Ford and not Toyota?

Neither qualifies as international stock unless you are buying them on a foreign exchange. Both are listed on the NYC and both have business globally, like just about every other major company on the Dow.  So you are actually get a lot of exposure to economies outside the US just by buying VTSAX.  And chill.

VTI holds Ford, VXUS holds Toyota. QED.

Guess I messed up by not quoting the post I was responding to "podcast says fees + international exposure of US companies means you don't need international funds". Was the post immediately before mine.

What makes you think VTI doesn't hold Toyota?  I'm curious how Toyota performs on the NYSE vs the Nikkei, though.


If you bought $10,000 of VTI ten years ago it would be up over 300% to about $33k today.   With VXUS you would be at around $15k or less than half the return.

[Telecaster]

My personal opinion: if you want to actively trade or buy and hold individual stocks, or take any approach other than buying broad-based indexes and ignoring them, you should track your total performance over time. Not “I bought this one stock and it went up a bunch”, not “I sold a bunch last year before the market went down so I missed that 10% drop”, but “my 3 year returns over my entire portfolio are x% apy, my 5 year returns are y% apy, and my 10 year returns are z% apy”

If you aren’t seriously tracking your performance it is easy to fool yourself that you are cleverer/more lucky than you really are.

I'm with you. I've seen this movie a few times before.  Every long bull run the stock picking experts come out of the woodwork, explaining their amazing hindsight.   What you don't hear much about is the foresight.  And you only hear about the hits, not the misses.   I wonder why that is? 

[EliteZags]

On international stocks - Do you really want to own Ford and not Toyota?

Neither qualifies as international stock unless you are buying them on a foreign exchange. Both are listed on the NYC and both have business globally, like just about every other major company on the Dow.  So you are actually get a lot of exposure to economies outside the US just by buying VTSAX.  And chill.

VTI holds Ford, VXUS holds Toyota. QED.

Guess I messed up by not quoting the post I was responding to "podcast says fees + international exposure of US companies means you don't need international funds". Was the post immediately before mine.

What makes you think VTI doesn't hold Toyota?  I'm curious how Toyota performs on the NYSE vs the Nikkei, though.


If you bought $10,000 of VTI ten years ago it would be up over 300% to about $33k today.   With VXUS you would be at around $15k or less than half the return.

what dates did you use?
calculating from Jul 2014 I'm getting ~$27K for VTI and ~$11.5K for VXUS, >11x returns for VTI

edit ah nm seems its just my numbers are just share price not including dividends

but technically your numbers are still 4.6x higher returns for VTI over VXUS

[Expatriate]

I actually buy the American exceptionalism argument, but in a dystopian way. The U.S. makes extreme tradeoffs to prioritize economic growth and the ability of equity owners to make large amounts of money. We accept extreme downsides in exchange for economic prioritization that other countries are unwilling to accept.

U.S. policy decisions such as low taxes, car-dependency, privatized healthcare, prescription drug monopolies, a lack of mental health or addiction care, over-use of disposable products, the standard American diet, wars every 10 years, etc. all reduce our quality of life, but generate lots of economic activity. Our cities are graceless moneymaking places, with six-lane stroads lined with billboards, chain restaurants, and retailers, each with huge parking lots scattered with fast-food trash, cigarette butts, and liquor bottles. Beggars with unaddressed addictions, mental health issues, or simply medical debt work most intersections now. Our houses are similarly graceless, and flimsily built, requiring remods or demolition every 20-40 years. Our life expectancy is reduced by all the time we spend on the road breathing carbon monoxide, nitrates, and carcinogenic soot, by the toxins we call food, by a lack of opportunities to walk or ride bikes, and by the violence of the people around us whose primary value is the acquisition of money and stuff.

All these decisions led to a highly productive labor force that must work extremely hard to manage oppressive debt loads that have become culturally normal. All these decisions opened up opportunities for business owners and stock holders to earn fortunes, even if their products make people's lives worse.

I might prefer to live in a country that bans billboards from blighting their cities and countrysides, that taxes rather than subsidizes petroleum products, that has public transportation and healthcare, that aggressively regulates the sale of harmful things, that does something to help their less fortunate, and that offers cleaner air and water.

However I would prefer to invest in the country where people are working like medieval serfs on a never ending treadmill of consumerism. The later country, basically a money-obsessed labor camp converting people's lives into dividends, will outproduce any country which tries to pursue the common good, even a little bit.

This is a pretty great post.

I second this.

I’m very content to be living in “socialist” Europe, but am overweighting the US in my investment portfolio for exactly this reason. If it’s about enabling anyone to start a business and make money (at the expense of those in what is practically salaried slavery), the US is far ahead of the rest of the world. In my view this also means the US offers a higher probability for new businesses to succeed. Add to that your business-friendly migration politics, and I think the US will continue to lead economically.

Note: this is not investment advice ;-)

[dandarc]

On international stocks - Do you really want to own Ford and not Toyota?

Neither qualifies as international stock unless you are buying them on a foreign exchange. Both are listed on the NYC and both have business globally, like just about every other major company on the Dow.  So you are actually get a lot of exposure to economies outside the US just by buying VTSAX.  And chill.

VTI holds Ford, VXUS holds Toyota. QED.

Guess I messed up by not quoting the post I was responding to "podcast says fees + international exposure of US companies means you don't need international funds". Was the post immediately before mine.

What makes you think VTI doesn't hold Toyota?  I'm curious how Toyota performs on the NYSE vs the Nikkei, though.


If you bought $10,000 of VTI ten years ago it would be up over 300% to about $33k today.   With VXUS you would be at around $15k or less than half the return.

The fact that the published list of about 3700 holdings doesn't include Toyota - I do find a ~$1.5 billion stake in ford though.

I mean, you're right, VTI has outperformed VXUS in a pretty big way recently. Was just sharing a brief reason someone might decide to hold international. If (a big if) the dollar ever weakens significantly, likely that is a boon for companies with operations predominantly outside the US.

[RWD]

My personal opinion: if you want to actively trade or buy and hold individual stocks, or take any approach other than buying broad-based indexes and ignoring them, you should track your total performance over time. Not “I bought this one stock and it went up a bunch”, not “I sold a bunch last year before the market went down so I missed that 10% drop”, but “my 3 year returns over my entire portfolio are x% apy, my 5 year returns are y% apy, and my 10 year returns are z% apy”

If you aren’t seriously tracking your performance it is easy to fool yourself that you are cleverer/more lucky than you really are.

I'm with you. I've seen this movie a few times before.  Every long bull run the stock picking experts come out of the woodwork, explaining their amazing hindsight.   What you don't hear much about is the foresight.  And you only hear about the hits, not the misses.   I wonder why that is?

Survivorship bias is a hell of a drug