Nereo, Sorry, I'm definitely not Trolling. I'm still new, so I'm trying to learn as much as I can.
I don't know when was the worst 30 year Real Return was. You said eyeballing it, maybe it's 1929, that's why I used 1929-1959.
I tried inputing different months in 1929 using the S and P calculator and found August 1929-August 1959 came at the worst at 6.049%.
https://dqydj.com/sp-500-return-calculator/
If 1929-1959 is not the worst, can someone tell me when the worst 30 year Real Return (with Dividend Reinvested) is?
I know that last 20 years the Real Return is 5.012% according to the calculator. That's worse then Aug 1929-1959 at 6.049%
Perhaps someone else can calculate what the next 10 year Real Returns need to be, in order to beat the worst 30 year return in history?
Just trying to learn, so any help would be appreciated!
Ok, I'm glad we're all trying to learn here (as am I) - forums get infested with trolls that repeat the same incorrect information.
Looking back part of my resposne seems to be gone - perhaps a result of using differnet devices to type responses. In any regard, it seems you did not see my full response to your earlier thread.
To paraphrase, the worst investment period was 1892-1922 (the aforementioned 3.2% annualized real). But there are dozens of others that are sub 5% (examples: periods starting in 1902 & 1912 both were under 4%, and most of the years from 1900-1915 were at or under 5%)
Looking more recently we've had periods below 6% (e.g. 1973-2003 returned just 5.4%). One could argue that our modern economy is fundamentally different from that of 100 years ago (it is), but it's simply false to say "the worst in history".
I'd also caution against cherry-picking one single dataset and making such a broad conclusions, because you risk picking a 'peak-to-valley', and while this may technically be an awful period for investing in the market, almost no one invests all their money in one month, waits 30 years and then calls it quits. If you're an ER drops early on ("sequence of returns risk") matters far more than the average returns.
To illustrate, consider the early 1970s. Looking at 30 year periods starting in January of each year, we have:
1972: 6.7% annual returns
1973: 5.4% annual returns
1974: 7.2% annual returns.
29/30 of years overlap between the starting date of 1973 and 1974, but the gains in 1974 were 33% greater. Regarding ERs, in the above example 1972 would have seemed to be a good year to return (annualized returns of 6.7% - not bad!) but in fact wasn;t because '73 and '74 both had big drops - sequence of returns did your portfolio in.
Looking forward at your examination of the last 20 years (Jan 1 1997- Dec 31 2016) we have returns of 5.3%. Not great.
What happens if we keep the end date (Dec 31 2016) but look at slightly different periods?
8 years: 13.1% (incredible!)
10 years: 5.0% (bad!)
15 years: 4.5% (even worse!)
20 years: 5.3% (not great)
25 years: 6.9% (pretty decent)
Mostly due to the "great recession" (and partly due to the 2001 'dot-com bubble') we've got another set of years where largely overlapping time periods might be considered very good and very bad periods for the market. But its misleading for the vast majority nof people that either invest periodically over multiple years/decades AND for people that make withdrawls periodically over years or decades. A single number only tells you so much about the time period, which brings us to your final point (that about 8% returns for a solid decade).
If we were to actually have 8% real returns for the next decade (following up on the 7+ year bull market we've already had) it would be a period of prosperity like we've never seen. The only exceptions would be if you only looked at periods that started just before the great recession. All other time periods would be near or above the maximum 30y annualized returns.
make sense? This resposne wound up way longer than I originally anticipated.
