Millennials have to save more and the stock market returns won't be as good..

[Ftao93]

While I'm sure that these things are possible, I find this article to be a bit fuzzy.  I don't think they have a guaranteed way of predicting anything.

http://www.denverpost.com/2017/01/11/millennials-double-retirement-savings/

[boarder42]

No one has a crystal ball people just write click bait move along

[Metric Mouse]

Those Millennials can't get anything right. Why don't they just have life-long debt like everyone else?

[AdrianC]

From the linked article:

"John Bogle, who founded the investment firm Vanguard, said market returns will “inevitably” be lower over the next decade."

Now why would he say that? Why are lots of other respected investment experts saying the same thing?

It's worth thinking about.

[boarder42]

From the linked article:

"John Bogle, who founded the investment firm Vanguard, said market returns will “inevitably” be lower over the next decade."

Now why would he say that? Why are lots of other respected investment experts saying the same thing?

It's worth thinking about.

lots of people say lots of things ... doesnt mean they can predict the future.

the market will have better than normal expected returns over the next 10 years.  you just heard me say that.  doesnt make my statement any worse or better than Bogle's.

[NoStacheOhio]

From the linked article:

"John Bogle, who founded the investment firm Vanguard, said market returns will “inevitably” be lower over the next decade."

Now why would he say that? Why are lots of other respected investment experts saying the same thing?

It's worth thinking about.

Isn't that worse news for people retiring in the near future? If we see 10 flat years instead of a big crash and rebound, wouldn't that just mean Millenials' retirement contributions are averaging in at a lower price?

I realize that's a lot of assumptions, but speaking very generally ...

[boarder42]

From the linked article:

"John Bogle, who founded the investment firm Vanguard, said market returns will “inevitably” be lower over the next decade."

Now why would he say that? Why are lots of other respected investment experts saying the same thing?

It's worth thinking about.

Isn't that worse news for people retiring in the near future? If we see 10 flat years instead of a big crash and rebound, wouldn't that just mean Millenials' retirement contributions are averaging in at a lower price?

I realize that's a lot of assumptions, but speaking very generally ...

well around here millenials could be Retiring in the midst of this.  seeing as they stretch from the high 30s and down now. i'm 7 years out i'd take a flat to down market the next 7 years to lower the PE.  most of my retirement is tied to my company ESOP performance anyways.

[NoStacheOhio]

From the linked article:

"John Bogle, who founded the investment firm Vanguard, said market returns will “inevitably” be lower over the next decade."

Now why would he say that? Why are lots of other respected investment experts saying the same thing?

It's worth thinking about.

Isn't that worse news for people retiring in the near future? If we see 10 flat years instead of a big crash and rebound, wouldn't that just mean Millenials' retirement contributions are averaging in at a lower price?

I realize that's a lot of assumptions, but speaking very generally ...

well around here millenials could be Retiring in the midst of this.  seeing as they stretch from the high 30s and down now. i'm 7 years out i'd take a flat to down market the next 7 years to lower the PE.  most of my retirement is tied to my company ESOP performance anyways.

Yeah, but from a general public point of view a flat ten years when you're 25+ years from retirement likely means you'll be sitting pretty.

[farmecologist]

From the article it looks to me like 'millennials' means 'anyone who needs to save'.  Taking that into consideration, they do have a point.  I tend to agree.  Based on stock market valuations, I'm not sure the market has the legs to continue with the returns of the past few years.  Looks like a major correction might be due at some point as well.  However, who knows what surprises the new administration, etc...will bring. 

Remember that many retirement tools use 7-8% as the benchmark.  Personal capital is one of the notable ones :

• "Inflation adjusted to show in today's dollars. Assumes 7.0% annual return and 8.6% annual standard deviation of return (volatility/risk), based on the historical return of your portfolio's current high level asset allocation."

If these predictions are true then it obviously means that our early retirement projections could be off by quite a bit!






 

[boarder42]

yay major correction.  if it could happen some time soon that would be fantastic!...

[ChpBstrd]

High valuations and political risks are undeniable. My investment adjustments in response to these is as follows. Comments or additions welcome.

Covered call CEFs.
REITs and MLPs.
Preferreds.
Select high-potential tech companies like Salesforce.

[Indexer]

lots of people say lots of things ... doesnt mean they can predict the future.

the market will have better than normal expected returns over the next 10 years.  you just heard me say that.  doesnt make my statement any worse or better than Bogle's.

Some people take indexing and efficient market hypothesis too far, and this is coming from Indexer ;). It's a financial hypothesis, not a religion. Yes markets are efficient. Yes it is very hard to time the market, especially once you consider cost. Yes, it is very hard to predict what the market will do next year. Yes, it is very hard to outsmart everyone else in the market.

That can all be true and you can still say the market is over or undervalued at any given time, which means there is a higher probability of lower or higher long term future returns. This isn't crazy talk. It isn't market timing. It's just observing history. Markets can be efficient AND have lower future expected returns. Example: with very low interest rates bonds can pay so little that more money flows to stocks. Even with the lower expected returns from stocks they are still attractive compared to everything else, like bonds. In this example stocks are still expected to earn more than anything else, but they are also likely to earn less than stocks of the past. Efficient and still likely to earn less in the future.

When Bogle says that returns in the future might be lower, to people who have studied this, it is about as radical as saying the sky is blue. Based on almost every metric the market is valued higher right now than most periods in the past. That doesn't guarantee, but it does increase the odds that returns in the future will be lower than in the past. I think the prudent thing to do is to plan on lower returns in the future. If you still have higher returns, that is amazing, but don't plan on it. I'm not saying change your AA or avoid stocks. I'm just saying you might want to assume a lower discount rate in your future value calculations. Bogle, Vanguard, Shiller, etc. etc. etc.  are saying the same thing.

Edit: for context, periods where the US market was priced higher than today looking at CAPE, PE, and market cap/GDP= 1929, 1997-2000. That's it. Note, 2007 didn't make the list. We passed 2007 in terms of valuations shortly after the US election.

[boarder42]

oh i agree we are high right now by valuations.  but there isnt anything to do with it or about it.

[farmecologist]

oh i agree we are high right now by valuations.  but there isnt anything to do with it or about it.

Well, it depends on where you are in life.   I've read in many other threads about how 'how well' people did in 2016..even going so far as to move up their expected FIRE date.  Many of these people seem to have a very,very high percentage invested in stocks.  I was in the same boat a few years ago..and let me tell you a good correction/crash can give you a very hard lesson on why diversification is important.  If you can take the risk, then go for it.  However, I fear that MANY people here will be extremely disappointed if a correction occurs in 2017. 

[boarder42]

oh i agree we are high right now by valuations.  but there isnt anything to do with it or about it.

Well, it depends on where you are in life.   I've read in many other threads about how 'how well' people did in 2016..even going so far as to move up their expected FIRE date.  Many of these people seem to have a very,very high percentage invested in stocks.  I was in the same boat a few years ago..and let me tell you a good correction/crash can give you a very hard lesson on why diversification is important.  If you can take the risk, then go for it.  However, I fear that MANY people here will be extremely disappointed if a correction occurs in 2017.

I'm 100% equity. I won't be disappointed in a correction. I'm in wealth accumulation and 7 years from FIRE.

[Metric Mouse]

oh i agree we are high right now by valuations.  but there isnt anything to do with it or about it.

Well, it depends on where you are in life.   I've read in many other threads about how 'how well' people did in 2016..even going so far as to move up their expected FIRE date.  Many of these people seem to have a very,very high percentage invested in stocks.  I was in the same boat a few years ago..and let me tell you a good correction/crash can give you a very hard lesson on why diversification is important.  If you can take the risk, then go for it.  However, I fear that MANY people here will be extremely disappointed if a correction occurs in 2017.

While I might be disappointed, I'm not sure that it would seriously affect my retirement.

[frugledoc]

High valuations and political risks are undeniable. My investment adjustments in response to these is as follows. Comments or additions welcome.

Covered call CEFs.
REITs and MLPs.
Preferreds.
Select high-potential tech companies like Salesforce.

Good luck

[Indexer]

oh i agree we are high right now by valuations.  but there isnt anything to do with it or about it.

Well, it depends on where you are in life.   I've read in many other threads about how 'how well' people did in 2016..even going so far as to move up their expected FIRE date.  Many of these people seem to have a very,very high percentage invested in stocks.  I was in the same boat a few years ago..and let me tell you a good correction/crash can give you a very hard lesson on why diversification is important.  If you can take the risk, then go for it.  However, I fear that MANY people here will be extremely disappointed if a correction occurs in 2017.

I would be excited if there was a correction. I'm actually hoping for it.

Counter intuitive right?  Nope. Market valuations are high. This implies lower future returns. If you drop the market by 50% today my existing money is worth 50%, but then valuations look great so the future returns from that point will likely be better. Therefore all of my new contributions will be able to grow that much faster.

If you are an accumulator, especially if you are more than 5 years from retirement, then volatility is your friend. If you are contributing a significant amount each year and it gets even better.

[swashbucklinstache]

oh i agree we are high right now by valuations.  but there isnt anything to do with it or about it.

Well, it depends on where you are in life.   I've read in many other threads about how 'how well' people did in 2016..even going so far as to move up their expected FIRE date.  Many of these people seem to have a very,very high percentage invested in stocks.  I was in the same boat a few years ago..and let me tell you a good correction/crash can give you a very hard lesson on why diversification is important.  If you can take the risk, then go for it.  However, I fear that MANY people here will be extremely disappointed if a correction occurs in 2017.

I would be excited if there was a correction. I'm actually hoping for it.

Counter intuitive right?  Nope. Market valuations are high. This implies lower future returns. If you drop the market by 50% today my existing money is worth 50%, but then valuations look great so the future returns from that point will likely be better. Therefore all of my new contributions will be able to grow that much faster.

If you are an accumulator, especially if you are more than 5 years from retirement, then volatility is your friend. If you are contributing a significant amount each year and it gets even better.

I'm sure you know this so I'm saying this generally, but it isn't always entirely like this. Around here people seem to forget that big market problems can also decimate industries leading to you losing your job or to suppressing of wages / promotion opportunities etc. I think people here overstate how good a crash would be for accumulators, around assuming that we'll return to historical averages. If we see a big crash below averages and don't return to those averages, I don't think it is good for accumulators the way people imagine it (buying at a discount). It would be good for it to happen sooner rather than later though, certainly, but not near as good as some people think when they assume we return to historical average stock market growth.

[Scandium]

From the linked article:

"John Bogle, who founded the investment firm Vanguard, said market returns will “inevitably” be lower over the next decade."

Now why would he say that? Why are lots of other respected investment experts saying the same thing?

It's worth thinking about.

Isn't that worse news for people retiring in the near future? If we see 10 flat years instead of a big crash and rebound, wouldn't that just mean Millenials' retirement contributions are averaging in at a lower price?

I realize that's a lot of assumptions, but speaking very generally ...

This I don't understand. The oldest millenials are about 30 years from normal retirement. From what I see these gurus are predicting poor returns for 10 years (which IMO is absurd and silly to guess at, but whatever). What do they say about returns after that? Shouldn't this be ok, or even good,  for millenials? Do you need high returns during early savings? I didn't think so.

And I'm no economist, but couldn't we have a ~30% correction tomorrow to "normal" PE, then 7% returns for the next 20 years just as easily? Why does it have to be streched out over 10 years? And why exactly 10? why not 8, or 13?

That, or it's just very easy to get clicks if you whine about how millennials are fucked and how shitty their (i.e. my) lives will be..

[farmecologist]

oh i agree we are high right now by valuations.  but there isnt anything to do with it or about it.

Well, it depends on where you are in life.   I've read in many other threads about how 'how well' people did in 2016..even going so far as to move up their expected FIRE date.  Many of these people seem to have a very,very high percentage invested in stocks.  I was in the same boat a few years ago..and let me tell you a good correction/crash can give you a very hard lesson on why diversification is important.  If you can take the risk, then go for it.  However, I fear that MANY people here will be extremely disappointed if a correction occurs in 2017.

I would be excited if there was a correction. I'm actually hoping for it.

Counter intuitive right?  Nope. Market valuations are high. This implies lower future returns. If you drop the market by 50% today my existing money is worth 50%, but then valuations look great so the future returns from that point will likely be better. Therefore all of my new contributions will be able to grow that much faster.

If you are an accumulator, especially if you are more than 5 years from retirement, then volatility is your friend. If you are contributing a significant amount each year and it gets even better.

I'm sure you know this so I'm saying this generally, but it isn't always entirely like this. Around here people seem to forget that big market problems can also decimate industries leading to you losing your job or to suppressing of wages / promotion opportunities etc. I think people here overstate how good a crash would be for accumulators, around assuming that we'll return to historical averages. If we see a big crash below averages and don't return to those averages, I don't think it is good for accumulators the way people imagine it (buying at a discount). It would be good for it to happen sooner rather than later though, certainly, but not near as good as some people think when they assume we return to historical average stock market growth.

As I mentioned in another thread, the bravado of some of you 100% equity people is rather interesting.  My whole point is to be careful out there and try to diversify at least a little.  Before the crash of '08, I heard exactly the same arguments as some of you are making now.  The crash happened...and those same people could not 'handle it'...and took money out of the market at exactly the wrong time.  If you are not one of those people, then great! However, lots of people thought they could handle it...but couldn't.

Any yes, I saw many people lose jobs/houses/cars/toys during the crash..it was downright scary.

Maybe the problem here is that some of us are arguing a correction vs a crash...Typically, a correction is a quick dip followed by a quick recovery...a crash is a very large and prolonged dip...followed by many years of economic turmoil ( job loss, etc.. ). 



 

[ChpBstrd]

I think - but cannot confirm - that even the most adamant buy-and-hold proponents have some threshold of overvaluation at which even they would sell. It might be an S&P PE ratio of 50 or it might be a price/sales ratio of 40, but eventually valuations could get scary enough to smoke anyone out, right?

Would this be market timing?

[Kaspian]

Defeatest! Another "you can't possibly win, so don't even try because you're a victim", stance.  Complaining about the only viable game in town is absurd.  Where's this author's responsibility land when some kid reads it, decides it's not worth trying to save that much, investing is crap, so dies an overworked pauper?

[AdrianC]

From the linked article:

"John Bogle, who founded the investment firm Vanguard, said market returns will “inevitably” be lower over the next decade."

Now why would he say that? Why are lots of other respected investment experts saying the same thing?

It's worth thinking about.

Isn't that worse news for people retiring in the near future? If we see 10 flat years instead of a big crash and rebound, wouldn't that just mean Millenials' retirement contributions are averaging in at a lower price?

I realize that's a lot of assumptions, but speaking very generally ...

This I don't understand. The oldest millenials are about 30 years from normal retirement. From what I see these gurus are predicting poor returns for 10 years (which IMO is absurd and silly to guess at, but whatever). What do they say about returns after that? Shouldn't this be ok, or even good,  for millenials? Do you need high returns during early savings? I didn't think so.

And I'm no economist, but couldn't we have a ~30% correction tomorrow to "normal" PE, then 7% returns for the next 20 years just as easily? Why does it have to be streched out over 10 years? And why exactly 10? why not 8, or 13?

That, or it's just very easy to get clicks if you whine about how millennials are fucked and how shitty their (i.e. my) lives will be..

I'm pretty sure we've had this conversation before.

Look up the "Gordon equation".

Here you go:

https://www.bogleheads.org/forum/viewtopic.php?t=45966

[Indexer]

As I mentioned in another thread, the bravado of some of you 100% equity people is rather interesting.  My whole point is to be careful out there and try to diversify at least a little.  Before the crash of '08, I heard exactly the same arguments as some of you are making now.  The crash happened...and those same people could not 'handle it'...and took money out of the market at exactly the wrong time.  If you are not one of those people, then great! However, lots of people thought they could handle it...but couldn't.

Any yes, I saw many people lose jobs/houses/cars/toys during the crash..it was downright scary.

Maybe the problem here is that some of us are arguing a correction vs a crash...Typically, a correction is a quick dip followed by a quick recovery...a crash is a very large and prolonged dip...followed by many years of economic turmoil ( job loss, etc.. ).

Oh, I completely agree. Most people shouldn't be 100% stocks, and many of the people who think they can be 100% stocks shouldn't be.

I know I'm not one of them, and I know everyone says that. For starters I'm very diversified, VTSAX+VTIAX. I do have bonds, just not in my retirement portfolio. I also remember how I felt in '08. I wished so badly that I had more money so I could invest it all.

I know recessions carry implications for real people. I experienced it to a degree, but I also saw family and friends go through that. I also recognize given a long enough time frame there will be another crash. Is it this year, 2019, 2020, 2022... who knows? Eventually it will happen. When it happens the one thing I will enjoy is making new contributions to my portfolio. In the next crash, whenever that is, you can count on me to be singing "buy buy buy!"

[aschmidt2930]

oh i agree we are high right now by valuations.  but there isnt anything to do with it or about it.

Well, it depends on where you are in life.   I've read in many other threads about how 'how well' people did in 2016..even going so far as to move up their expected FIRE date.  Many of these people seem to have a very,very high percentage invested in stocks.  I was in the same boat a few years ago..and let me tell you a good correction/crash can give you a very hard lesson on why diversification is important.  If you can take the risk, then go for it.  However, I fear that MANY people here will be extremely disappointed if a correction occurs in 2017.

I would be excited if there was a correction. I'm actually hoping for it.

Counter intuitive right?  Nope. Market valuations are high. This implies lower future returns. If you drop the market by 50% today my existing money is worth 50%, but then valuations look great so the future returns from that point will likely be better. Therefore all of my new contributions will be able to grow that much faster.

If you are an accumulator, especially if you are more than 5 years from retirement, then volatility is your friend. If you are contributing a significant amount each year and it gets even better.

I'm sure you know this so I'm saying this generally, but it isn't always entirely like this. Around here people seem to forget that big market problems can also decimate industries leading to you losing your job or to suppressing of wages / promotion opportunities etc. I think people here overstate how good a crash would be for accumulators, around assuming that we'll return to historical averages. If we see a big crash below averages and don't return to those averages, I don't think it is good for accumulators the way people imagine it (buying at a discount). It would be good for it to happen sooner rather than later though, certainly, but not near as good as some people think when they assume we return to historical average stock market growth.

As I mentioned in another thread, the bravado of some of you 100% equity people is rather interesting.  My whole point is to be careful out there and try to diversify at least a little.  Before the crash of '08, I heard exactly the same arguments as some of you are making now.  The crash happened...and those same people could not 'handle it'...and took money out of the market at exactly the wrong time.  If you are not one of those people, then great! However, lots of people thought they could handle it...but couldn't.

Any yes, I saw many people lose jobs/houses/cars/toys during the crash..it was downright scary.

Maybe the problem here is that some of us are arguing a correction vs a crash...Typically, a correction is a quick dip followed by a quick recovery...a crash is a very large and prolonged dip...followed by many years of economic turmoil ( job loss, etc.. ).

Good post.  I occasionally wonder how this place will be different when the inevitable downturn in the market comes.  It's easy to talk tough about being 100% invested in equities and answer everything with quips like "time in the market beats timing the market" when the market is rising (as it has for this site's existence).  I hope everyone here stands strong and doesn't panic, but it seems unlikely.

[One Noisy Cat]

Yup, stock returns over the next decade will definitely be lower. The famed "Death of Equities" issue of "Business Week"  in 1979 will finally come to pass.

Yup, the sarcasm generator was running at top speed on this post. I don't have a fricking clue what the next decade holds and no one else does either. Oh, you can guess...even super smart people like Jack Bogle.

But at the same time, it's wise to save as if they will be on the low side.  Better to be pleasantly surprised than unpleasantly.

[steveo]

Yup, stock returns over the next decade will definitely be lower. The famed "Death of Equities" issue of "Business Week"  in 1979 will finally come to pass.

Yup, the sarcasm generator was running at top speed on this post. I don't have a fricking clue what the next decade holds and no one else does either. Oh, you can guess...even super smart people like Jack Bogle.

But at the same time, it's wise to save as if they will be on the low side.  Better to be pleasantly surprised than unpleasantly.

I got to pay this post. It's also 100% correct. Predicting the future is basically impossible. I personally am not going to try and save as if returns will be poor though. I don't see the point.

[boarder42]

As I mentioned in another thread, the bravado of some of you 100% equity people is rather interesting.  My whole point is to be careful out there and try to diversify at least a little.  Before the crash of '08, I heard exactly the same arguments as some of you are making now.  The crash happened...and those same people could not 'handle it'...and took money out of the market at exactly the wrong time.  If you are not one of those people, then great! However, lots of people thought they could handle it...but couldn't.

Any yes, I saw many people lose jobs/houses/cars/toys during the crash..it was downright scary.

Maybe the problem here is that some of us are arguing a correction vs a crash...Typically, a correction is a quick dip followed by a quick recovery...a crash is a very large and prolonged dip...followed by many years of economic turmoil ( job loss, etc.. ).

Oh, I completely agree. Most people shouldn't be 100% stocks, and many of the people who think they can be 100% stocks shouldn't be.

I know I'm not one of them, and I know everyone says that. For starters I'm very diversified, VTSAX+VTIAX. I do have bonds, just not in my retirement portfolio. I also remember how I felt in '08. I wished so badly that I had more money so I could invest it all.

I know recessions carry implications for real people. I experienced it to a degree, but I also saw family and friends go through that. I also recognize given a long enough time frame there will be another crash. Is it this year, 2019, 2020, 2022... who knows? Eventually it will happen. When it happens the one thing I will enjoy is making new contributions to my portfolio. In the next crash, whenever that is, you can count on me to be singing "buy buy buy!"

the people around this site arent the type of people that lose everything in an 08 crash/correction.  even if all my accounts are instantly cut in half and i lose my job i have enought to live on for 10 years give or take depending on the speed of market recovery. 

speaking in hyperbole about the 08 crash and people you knew doesnt really equate to the hypersaving early retirment group.  the people around town saving 10% All in equities are in a much different place than the people of this site saving 50 -60- 70% all in equities. 
1. we have lower expenses
2. we have more savings
3. if you're that focused on FIRE and can obtain that goal you're likely a higher level of individual who is less likely to get laid off from your job.  or at the very least wont be the first to go.

the opportunity cost risks of not being 100% equity while in the growth phase far out weigh the losses from one correction or crash of the markets.  which arent really that high right now.  its been pointed out many places the shiller PE isnt overly high when you removed the outlier years mainly 2009 when earnings were in the toilet.  also if we have another 2015 and earning rise the shiller will be back in line with about a 25 which is right in line with stable growth and the 4% SWR.  We arent at 2000 valuations.

[AZryan]

In 2008 stocks lost ~50%. A 25/75 bond/stock mix still lost over 36%. Bonds didn't 'save' anyone. By the end of 2009, stocks were only ~10% lower than the 25/75 mix. Not a big deal, and that's only looking at the worst, narrowest timeframe of that HUGE crash.

And no one advocating against 100% stocks seems to ever suggest anything so guarded as a 50/50 mix or even 40/60, so I don't see ~10-25% bonds as anything more than a mild 'buffer' in crash, and a modest 'drag' in the long run.

Also note that someone in 100% stocks typically gained so much more before (and after) a crash that with a little perspective, we can see they're still winning the race (and will probably get to the finish line faster).

If there's a 'next big crash', anyone coming to this site will no doubt see TONS of posts saying 'Don't sell!' 'Don't lock in your losses!' 'Don't be dumb!' 'Put more money in, if you can!'
Anyone freaking out will get scolded or calmed down here. If none of that works, then those people literally don't belong here, and none of us can help them.

[AZryan]

Oh... and when this article came out 11 days into January, the market was already up 1.73%. It warns we'll only get 4% this year. Yeah... they don't know. No one does. It might very well end up at 4% on Dec. 31st, but it would still mean no one knew it.

Sidenote -from the article, it says, "U.S. stock markets gained 7.9 percent a year on average between 1985 and 2014".

portfoliovisualizer.com shows that the total market's compound annual growth rate for this period was ~11%. Is the article subtracting inflation (~3%-ish?) and not mentioning it, or do they mean something diff by 'gain per year on avg.' compared to CAGR?

[shotgunwilly]

If there's a 'next big crash', anyone coming to this site will no doubt see TONS of posts saying 'Don't sell!' 'Don't lock in your losses!' 'Don't be dumb!' 'Put more money in, if you can!'
Anyone freaking out will get scolded or calmed down here. If none of that works, then those people literally don't belong here, and none of us can help them.

Yea, that's all great in theory and easy to say now.  But I would say MOST people here, especially Millennials, have never experienced such a drop in the market, and therefor their assets, firsthand.  It's very simple to say "I will just continue to pour money into the market when it plunges," but hard to do when you don't have a job and can't find one. And now you have to sell some of your funds that have plunged just so you can pay that mortgage that you have not been paying off because you wanted to invest in equities instead.

Emergency funds help greatly and all of us will be ahead of most people when it happens, but to say you know exactly what you will do, not knowing what you may HAVE to do, is kind of foolish.  As someone said before, it will be interesting to see the sentiment here when it does finally happen.  Here's to hoping we all come out well though!

[farmecologist]

If there's a 'next big crash', anyone coming to this site will no doubt see TONS of posts saying 'Don't sell!' 'Don't lock in your losses!' 'Don't be dumb!' 'Put more money in, if you can!'
Anyone freaking out will get scolded or calmed down here. If none of that works, then those people literally don't belong here, and none of us can help them.

Yea, that's all great in theory and easy to say now.  But I would say MOST people here, especially Millennials, have never experienced such a drop in the market, and therefor their assets, firsthand.  It's very simple to say "I will just continue to pour money into the market when it plunges," but hard to do when you don't have a job and can't find one. And now you have to sell some of your funds that have plunged just so you can pay that mortgage that you have not been paying off because you wanted to invest in equities instead.

Emergency funds help greatly and all of us will be ahead of most people when it happens, but to say you know exactly what you will do, not knowing what you may HAVE to do, is kind of foolish.  As someone said before, it will be interesting to see the sentiment here when it does finally happen.  Here's to hoping we all come out well though!

There are obviously some very, very strong opinions here.  I think the article ( and probably some of my comments ) brought up some strong feelings. 

The moral of the story here is to do what you are comfortable with.  As for myself, I'm very comfortable that I have my core accounts in 'balanced' funds.  I like seeing the dividends every quarter....which are getting to be very substantial.  I also have 'play money' accounts where I trade individual stocks...and have done quite well.  I think it is a great balance. 

To each their own.  We will all reach FIRE in different ways.  One of the very reasons I love this community is because of the passion about saving, etc... and all the arguments that come with it. 

[dougules]

I think - but cannot confirm - that even the most adamant buy-and-hold proponents have some threshold of overvaluation at which even they would sell. It might be an S&P PE ratio of 50 or it might be a price/sales ratio of 40, but eventually valuations could get scary enough to smoke anyone out, right?

Would this be market timing?

Even if you go with this, it completely depends on what you're going jump to instead.  You possibly could have made a case for it in 2000 when bonds were returning pretty well.  Now, though, interest rates are low, and real estate prices have gone back up. 

Yup, stock returns over the next decade will definitely be lower. The famed "Death of Equities" issue of "Business Week"  in 1979 will finally come to pass.

Yup, the sarcasm generator was running at top speed on this post. I don't have a fricking clue what the next decade holds and no one else does either. Oh, you can guess...even super smart people like Jack Bogle.

But at the same time, it's wise to save as if they will be on the low side.  Better to be pleasantly surprised than unpleasantly.

Nobody's saying equities are dead.  They're just likely to have relatively low returns over the medium-term future.  Interest rates are at historically low rates right now, and that's what's driving everything else, including stocks.  It's not the end of the world or even historically unprecedented.  Just don't plan your life for the next decade based on 10% returns. 

My question is, are the low interest rates we have now just a passing phase of the economic cycle or is some systemic/demographic change going to make them stay low for a long time?  That's what's going to drive stock returns in the longer-term future.   

[AZryan]

Yea, that's all great in theory and easy to say now.

What's easy to say?? You quoted me saying that lots of people here will totally try to dissuade anyone from cashing out of stocks who gets freaked out by 'the next big crash'. I think that statement's almost guaranteed to be true. It's a sentiment that's already been made here by plenty of regulars (and MMM himself), so it's not exactly like I need a crystal ball to point it out.

But you're not even arguing that they won't try to dissuade those getting freaked out. You're basically just repeating the idea that people will get freaked out. Ok. I never said no one would.

But I would say MOST people here, especially Millennials, have never experienced such a drop in the market-

You might be right, but are you? How do you know how old everyone here is and assume "MOST" hadn't been in the market during the last crash -which was only at the end of 2008?? Your imagination is not valid proof.

If anything, they ought to at least KNOW about that crash, and know that all the money came back (and far more). And all the dummies who swore off Wall Street's 'ponzi scheme' missed out on tons of profits.

You go on to invent a whole scenario of someone losing their job and being desperate for cash that has nothing to do with what I wrote. Those sort of people would be just as screwed no matter what their asset allocation. I was only talking about what misguided 'fear' shouldn't make people do.

Feel free to argue with what I wrote, but don't pretend to argue against things I didn't write at all.

For the record... if someone had tragically bad timing and put a lump sum in the market in 2000 instead of a 25/75 split, they'd only be a little down today compared to the 25/75 split. That's hitting the two biggest market crashes in anyone's lifetime. And that I know based on the reasonable assumption that no one here was invested during the Great Depression.

If someone started investing consistently in 2000, they'd be a tiny bit ahead by being 100% stocks.
If they retired at that time on the 4% rule, they'd only be a tiny bit behind.
At almost any other time... 100% stocks would put someone way ahead of a fund with a good chunk of bonds.

Maybe instead of repeatedly scaring people and underestimating them, we should try to make them braver by being better educated?

[AZryan]

The moral of the story here is to do what you are comfortable with.

Sorry, but no it isn't. While it sounds nice to hope that everyone's 'comfortable', that's not how you should actually decide what you should be invested in.
We should be focusing on logic/reason and facts. Once we have a good handle on those, we ought to come to a sound judgement that then makes us 'feel comfortable'.

We're all in different situations, so that ought to logically lead us to different investments and allocations. But the process should follow facts not feelings.

[boarder42]

Yea, that's all great in theory and easy to say now.

What's easy to say?? You quoted me saying that lots of people here will totally try to dissuade anyone from cashing out of stocks who gets freaked out by 'the next big crash'. I think that statement's almost guaranteed to be true. It's a sentiment that's already been made here by plenty of regulars (and MMM himself), so it's not exactly like I need a crystal ball to point it out.

But you're not even arguing that they won't try to dissuade those getting freaked out. You're basically just repeating the idea that people will get freaked out. Ok. I never said no one would.

But I would say MOST people here, especially Millennials, have never experienced such a drop in the market-

You might be right, but are you? How do you know how old everyone here is and assume "MOST" hadn't been in the market during the last crash -which was only at the end of 2008?? Your imagination is not valid proof.

If anything, they ought to at least KNOW about that crash, and know that all the money came back (and far more). And all the dummies who swore off Wall Street's 'ponzi scheme' missed out on tons of profits.

You go on to invent a whole scenario of someone losing their job and being desperate for cash that has nothing to do with what I wrote. Those sort of people would be just as screwed no matter what their asset allocation. I was only talking about what misguided 'fear' shouldn't make people do.

Feel free to argue with what I wrote, but don't pretend to argue against things I didn't write at all.

For the record... if someone had tragically bad timing and put a lump sum in the market in 2000 instead of a 25/75 split, they'd only be a little down today compared to the 25/75 split. That's hitting the two biggest market crashes in anyone's lifetime. And that I know based on the reasonable assumption that no one here was invested during the Great Depression.

If someone started investing consistently in 2000, they'd be a tiny bit ahead by being 100% stocks.
If they retired at that time on the 4% rule, they'd only be a tiny bit behind.
At almost any other time... 100% stocks would put someone way ahead of a fund with a good chunk of bonds.

Maybe instead of repeatedly scaring people and underestimating them, we should try to make them braver by being better educated?

i started trading stocks at 10 years old i lived and traded thru the .com crash and the 08 crash.  i was young and dumb then and didnt know about indexing.  And people like to say the money i was playing with then wasnt near the magnitude of now.  well guess what 1k to a 10 year old is a lot of money to be trading with esp. when you see it drop in the .com bubble.  there is an entire write up on bob the worlds worst market timer.  even with that he comes out way ahead and he only dumps money in at market peeks. 

[farmecologist]

The moral of the story here is to do what you are comfortable with.

Sorry, but no it isn't. While it sounds nice to hope that everyone's 'comfortable', that's not how you should actually decide what you should be invested in.
We should be focusing on logic/reason and facts. Once we have a good handle on those, we ought to come to a sound judgement that then makes us 'feel comfortable'.

We're all in different situations, so that ought to logically lead us to different investments and allocations. But the process should follow facts not feelings.

Boy...some people love to argue.  Feels like you are trolling me now...lol

[AZryan]

boarder42,

You're not really even making sense anymore. You're not really replying to anything I wrote, and you're just making a big mess by reposting every single word we both already wrote.

farmecologist,

I'm not trolling you! You simply made an awful generalization that all of this is about everyone just feeling comfortable in whatever they invest in. You're not the first to make this point. It's a lousy point and ought to be shot down because it's totally baseless and random.
Try an actual counterpoint next time rather than a childish insult.

[boarder42]

yes it all does make sense. 

People here though cant focus on logic reason and facts.  you have a whole thread of people throwing caution to the wind and paying down their mortgages on a single income even vs investing that money and at least lump sum paying it off if thats your goal. 

many people cant put logic ahead of emotion and feelings.

[farmecologist]

boarder42,

You're not really even making sense anymore. You're not really replying to anything I wrote, and you're just making a big mess by reposting every single word we both already wrote.

farmecologist,

I'm not trolling you! You simply made an awful generalization that all of this is about everyone just feeling comfortable in whatever they invest in. You're not the first to make this point. It's a lousy point and ought to be shot down because it's totally baseless and random.
Try an actual counterpoint next time rather than a childish insult.

I guess you may have misunderstood what I meant...or I didn't spell it out clearly. 

What I meant is that everyone has to be comfortable with a particular risk level, which is based on many factors (age, etc..).  Frankly, if you are trying to argue that 100% equity is less risky than a diversified approach...well then we might as well discontinue this discussion...because we will never agree with each other.  And that's OK.  And you really do come off in a condescending manner regarding the choices some of us have made.  Maybe you need to think about the way you present yourself here.

[Mr. Boh]

yes it all does make sense. 

People here though cant focus on logic reason and facts.  you have a whole thread of people throwing caution to the wind and paying down their mortgages on a single income even vs investing that money and at least lump sum paying it off if thats your goal. 

many people cant put logic ahead of emotion and feelings.

+1

There is a school of thought that most of the important decisions in life are actually made on the basis of emotion rather than logic.

[Indexer]

As I mentioned in another thread, the bravado of some of you 100% equity people is rather interesting.  My whole point is to be careful out there and try to diversify at least a little.  Before the crash of '08, I heard exactly the same arguments as some of you are making now.  The crash happened...and those same people could not 'handle it'...and took money out of the market at exactly the wrong time.  If you are not one of those people, then great! However, lots of people thought they could handle it...but couldn't.

Any yes, I saw many people lose jobs/houses/cars/toys during the crash..it was downright scary.

Maybe the problem here is that some of us are arguing a correction vs a crash...Typically, a correction is a quick dip followed by a quick recovery...a crash is a very large and prolonged dip...followed by many years of economic turmoil ( job loss, etc.. ).

Oh, I completely agree. Most people shouldn't be 100% stocks, and many of the people who think they can be 100% stocks shouldn't be.

I know I'm not one of them, and I know everyone says that. For starters I'm very diversified, VTSAX+VTIAX. I do have bonds, just not in my retirement portfolio. I also remember how I felt in '08. I wished so badly that I had more money so I could invest it all.

I know recessions carry implications for real people. I experienced it to a degree, but I also saw family and friends go through that. I also recognize given a long enough time frame there will be another crash. Is it this year, 2019, 2020, 2022... who knows? Eventually it will happen. When it happens the one thing I will enjoy is making new contributions to my portfolio. In the next crash, whenever that is, you can count on me to be singing "buy buy buy!"

the people around this site arent the type of people that lose everything in an 08 crash/correction.  even if all my accounts are instantly cut in half and i lose my job i have enought to live on for 10 years give or take depending on the speed of market recovery. 

speaking in hyperbole about the 08 crash and people you knew doesnt really equate to the hypersaving early retirment group.  the people around town saving 10% All in equities are in a much different place than the people of this site saving 50 -60- 70% all in equities. 
1. we have lower expenses
2. we have more savings
3. if you're that focused on FIRE and can obtain that goal you're likely a higher level of individual who is less likely to get laid off from your job.  or at the very least wont be the first to go.

the opportunity cost risks of not being 100% equity while in the growth phase far out weigh the losses from one correction or crash of the markets.  which arent really that high right now.  its been pointed out many places the shiller PE isnt overly high when you removed the outlier years mainly 2009 when earnings were in the toilet.  also if we have another 2015 and earning rise the shiller will be back in line with about a 25 which is right in line with stable growth and the 4% SWR.  We arent at 2000 valuations.

You quoted me...  Are you replying to me or farmecologist? I'm 100% stocks and support that as long as people are comfortable with the risk. Reading your post it sounds like you agree with me, but it is written in a tone as if you disagree with me.

[farmecologist]

As I mentioned in another thread, the bravado of some of you 100% equity people is rather interesting.  My whole point is to be careful out there and try to diversify at least a little.  Before the crash of '08, I heard exactly the same arguments as some of you are making now.  The crash happened...and those same people could not 'handle it'...and took money out of the market at exactly the wrong time.  If you are not one of those people, then great! However, lots of people thought they could handle it...but couldn't.

Any yes, I saw many people lose jobs/houses/cars/toys during the crash..it was downright scary.

Maybe the problem here is that some of us are arguing a correction vs a crash...Typically, a correction is a quick dip followed by a quick recovery...a crash is a very large and prolonged dip...followed by many years of economic turmoil ( job loss, etc.. ).

Oh, I completely agree. Most people shouldn't be 100% stocks, and many of the people who think they can be 100% stocks shouldn't be.

I know I'm not one of them, and I know everyone says that. For starters I'm very diversified, VTSAX+VTIAX. I do have bonds, just not in my retirement portfolio. I also remember how I felt in '08. I wished so badly that I had more money so I could invest it all.

I know recessions carry implications for real people. I experienced it to a degree, but I also saw family and friends go through that. I also recognize given a long enough time frame there will be another crash. Is it this year, 2019, 2020, 2022... who knows? Eventually it will happen. When it happens the one thing I will enjoy is making new contributions to my portfolio. In the next crash, whenever that is, you can count on me to be singing "buy buy buy!"

the people around this site arent the type of people that lose everything in an 08 crash/correction.  even if all my accounts are instantly cut in half and i lose my job i have enought to live on for 10 years give or take depending on the speed of market recovery. 

speaking in hyperbole about the 08 crash and people you knew doesnt really equate to the hypersaving early retirment group.  the people around town saving 10% All in equities are in a much different place than the people of this site saving 50 -60- 70% all in equities. 
1. we have lower expenses
2. we have more savings
3. if you're that focused on FIRE and can obtain that goal you're likely a higher level of individual who is less likely to get laid off from your job.  or at the very least wont be the first to go.

the opportunity cost risks of not being 100% equity while in the growth phase far out weigh the losses from one correction or crash of the markets.  which arent really that high right now.  its been pointed out many places the shiller PE isnt overly high when you removed the outlier years mainly 2009 when earnings were in the toilet.  also if we have another 2015 and earning rise the shiller will be back in line with about a 25 which is right in line with stable growth and the 4% SWR.  We arent at 2000 valuations.

You quoted me...  Are you replying to me or farmecologist? I'm 100% stocks and support that as long as people are comfortable with the risk. Reading your post it sounds like you agree with me, but it is written in a tone as if you disagree with me.

I'm not sure who agrees with who anymore.  :-)

But I do think that we agree that you have to invest at the 'risk level' that makes you comfortable.  However, there seems to be two completely different though processes on what 'risk level' even is.  We also agree that the average person here isn't an 'average joe' investor.







 

[tooqk4u22]

But you're not even arguing that they won't try to dissuade those getting freaked out. You're basically just repeating the idea that people will get freaked out. Ok. I never said no one would.

Yes, there will be many people and pundits telling everyone not to freak out and to stay the course.  But most people won't listen because fear of loss is very powerful and generally for the masses wins the day - the people that don't freak out typically are those that have been through it before (that were usually on the freak out side), those that have very little relative to their income (if you have 10k and your putting 1k in every month your balances don't appear to be declining as much so no big deal), and to some extent retirement money (people tend to forget about 401ks in these situations). 

The reality is that if people/investors didn't freak out there would never be a crash - so the very premise of a crash has to include most freaking out.

But I would say MOST people here, especially Millennials, have never experienced such a drop in the market-

You might be right, but are you? How do you know how old everyone here is and assume "MOST" hadn't been in the market during the last crash -which was only at the end of 2008?? Your imagination is not valid proof.

If anything, they ought to at least KNOW about that crash, and know that all the money came back (and far more). And all the dummies who swore off Wall Street's 'ponzi scheme' missed out on tons of profits.

You go on to invent a whole scenario of someone losing their job and being desperate for cash that has nothing to do with what I wrote. Those sort of people would be just as screwed no matter what their asset allocation. I was only talking about what misguided 'fear' shouldn't make people do.

Feel free to argue with what I wrote, but don't pretend to argue against things I didn't write at all.

For the record... if someone had tragically bad timing and put a lump sum in the market in 2000 instead of a 25/75 split, they'd only be a little down today compared to the 25/75 split. That's hitting the two biggest market crashes in anyone's lifetime. And that I know based on the reasonable assumption that no one here was invested during the Great Depression.

If someone started investing consistently in 2000, they'd be a tiny bit ahead by being 100% stocks.
If they retired at that time on the 4% rule, they'd only be a tiny bit behind.
At almost any other time... 100% stocks would put someone way ahead of a fund with a good chunk of bonds.

Maybe instead of repeatedly scaring people and underestimating them, we should try to make them braver by being better educated?

I agree with the premise of your comments but it does ignore actual experience and psychology.  I won't speak for the "Most" here, although reading through many of the posts over the years suggests (not confirms) that there is a greater population of millennials on this forum, but that makes sense anyway because millennials are the largest population at this point, are more tech savy and social media oriented than the next largest population (boomers) who in all reality aren't as likely to be drawn to a FIRE website/forum given their ages. 

But to the point about millennials, the oldest ones were just coming out of college and early in their careers, maybe a few had a couple of shekels saved in a 401k or whatever but nothing all that meaningfull. The rest of the millennials were younger and little to no vested interest in the markets when the downturn started in 2007 - sure they might have witnessed or experienced tangentially through their parents or caught some of the news when they headed out the door to the prom or Saturday night shitty lite beer parties in the woods but they didn't experience first hand and don't have the mental imprints/skars to really know what it means.  I absolutely believe everyone here truly believes they will have the fortitude to stay the course because of all the posting, reading, hirstorical perspective....blah blah blah....but they won't at least for the majority of millennials. 

For the dotcom bust I was at that early stage where the markets were blowing up but I really didn't have that much and was either close to finishing college or just early in my career so losing 50% of 10k didn't really mean anything.  Fast forward to 2007-2009, it was scary.  I left my 401k alone because afterall I can't touch it for another 30 years but in my taxed accounts made some silly (not regrettable) decisions with buys and sells some timed well, some very much not. During the downturn there were really two declines - the first was about 15% - I bought some more, didn't sell as its only a correction or maybe a recession/bear market, ah no big deal. But when the next leg dropped, ouch - I sold some of the stuff I bought and shouldn't have. The biggest mistake I made was taking too long to begin re-investing (outside of 401k) even though my cash continued to pile up, which is actually worst than selling given 20/20 hindsight and the stock market run up - so there was definitely money left on the table.

Of course there are other issues that affect psychology - for me it was I was a single income household with SAHM and three kids.....oh yeah and I worked for a bank (not one of the highly paid crazy investment banks) but still a bank.  For me it was a stressful time, to have all this going on, a mortgage, and having hard earned savings essentially evaporate.  Fast forward,  I understand the past and lived with it I am very confident I would not sell in a downturn (re-balance, yes but not sell) but I am by nature a fairly conservative person, which I think has served me and mine well, and I personally don't like extreme volatility in any aspect of my life investment or otherwise so 100% equities would not work for me because I appreciate the lower volatility/increased flexibility of a more balanced AA and am willing to give up some returns at this stage of my life for that.   

But I will say that even if millennials do freak out and either sell (or take too long to buy back in) it will be ok, they will be fine.  I hope they learn from history but history tends to repeat itself and I see no reason to think they will be any different.

[shotgunwilly]

Yea, that's all great in theory and easy to say now.

What's easy to say?? You quoted me saying that lots of people here will totally try to dissuade anyone from cashing out of stocks who gets freaked out by 'the next big crash'. I think that statement's almost guaranteed to be true. It's a sentiment that's already been made here by plenty of regulars (and MMM himself), so it's not exactly like I need a crystal ball to point it out.

But you're not even arguing that they won't try to dissuade those getting freaked out. You're basically just repeating the idea that people will get freaked out. Ok. I never said no one would.

But I would say MOST people here, especially Millennials, have never experienced such a drop in the market-

You might be right, but are you? How do you know how old everyone here is and assume "MOST" hadn't been in the market during the last crash -which was only at the end of 2008?? Your imagination is not valid proof.

If anything, they ought to at least KNOW about that crash, and know that all the money came back (and far more). And all the dummies who swore off Wall Street's 'ponzi scheme' missed out on tons of profits.

You go on to invent a whole scenario of someone losing their job and being desperate for cash that has nothing to do with what I wrote. Those sort of people would be just as screwed no matter what their asset allocation. I was only talking about what misguided 'fear' shouldn't make people do.

Feel free to argue with what I wrote, but don't pretend to argue against things I didn't write at all.

For the record... if someone had tragically bad timing and put a lump sum in the market in 2000 instead of a 25/75 split, they'd only be a little down today compared to the 25/75 split. That's hitting the two biggest market crashes in anyone's lifetime. And that I know based on the reasonable assumption that no one here was invested during the Great Depression.

If someone started investing consistently in 2000, they'd be a tiny bit ahead by being 100% stocks.
If they retired at that time on the 4% rule, they'd only be a tiny bit behind.
At almost any other time... 100% stocks would put someone way ahead of a fund with a good chunk of bonds.

Maybe instead of repeatedly scaring people and underestimating them, we should try to make them braver by being better educated?

I quoted you as saying:

If none of that works, then those people literally don't belong here, and none of us can help them.

And my point was clearly that there is going to be people, members of this forum, that will undoubtedly freak out when the crash comes. To borrow a line from you and apply it to my own statement:  "I think that statement's almost guaranteed to be true... it's not exactly like I need a crystal ball to point it out."  And alot of them, right now, believe that when it happens, they will stay strong or have the means to not sell.  But not everyone is right, and not EVERYONE on this forum will be able to. Does that mean that they "don't belong here" as you are quoted saying? 

And I'm not sure why you're arguing with me on my opinion that most people here have probably not experienced a large financial crash and loss of their assets (or atleast their assets on paper.) Or that most are Millennials. This is an observation from reading thousands of posts from members.  I may be right, I may be wrong when I say "most" but does that even matter?  (I'd be willing to gamble on it! Of course that doesn't matter either.)

You go on to invent a whole scenario of someone losing their job and being desperate for cash that has nothing to do with what I wrote. Those sort of people would be just as screwed no matter what their asset allocation. I was only talking about what misguided 'fear' shouldn't make people do.

Feel free to argue with what I wrote, but don't pretend to argue against things I didn't write at all.

There's "inventing" a scenario and then there's stating an obvious outcome. Which is what happens in a major downturn. A lot of people will lose their jobs that were not expecting to.

You clearly didn't understand that the words "that's all great in theory and easy to say now," is directed to people in general who claim when a crash comes, that they know exactly what to do, what will happen, and how to make it through unscathed.  Some will, some won't. Some have a stronger will than others, some will be luckier than others, some will be in industries that could be directly effected or even the cause of a huge downturn.  But no one can know for sure what will happen.  Period. 

You must be the type that just loves to argue.  You even used that word alot, when I never was arguing with you in the first place.

I know what the data says, and I know that everyone should not freak out and sell in a downturn.  I agree that everyone should be educated and get help from this forum.  But my statement from the first sentence to the last was pretty clear:

"Yea, that's all great in theory and easy to say now, But.......................As someone said before, it will be interesting to see the sentiment here when it does finally happen.  Here's to hoping we all come out well though!

[Ryland]

I think this thread could have stopped right here...

"John Bogle, who founded the investment firm Vanguard, said market returns will “inevitably” be lower over the next decade."

Now why would he say that? Why are lots of other respected investment experts saying the same thing?

Why did Bogle say that?

If you figure it out yourself and are willing to put your money on it, then hell, "Go for it." But there will never be a 100% certainty of any future prediction. Bogle would agree with that.

Also if valuations are too high, you can always consider other investment classes like real estate and/or businesses. But just make sure you really study up!

[steveo]

I think Bogle would also state that you can't do anything about it. I think I heard an interview where he went 50/50 stocks/bonds prior to the year 2000.

[AdrianC]

I think Bogle would also state that you can't do anything about it. I think I heard an interview where he went 50/50 stocks/bonds prior to the year 2000.

Invest we must.
Stay the course.
Have realistic expectations.

Market returns weren't all that important for me in reaching FI. It's all about that savings rate.

A 4% real return from a diversified portfolio is all we need in FIRE, so we're good.

[dougules]

I think we are talking about the fundamental drivers of economic growth here, not the outcomes.  It is probably not a good theme for this site, but few understand why the stock market has delivered its consistent growth.  A firm i worked for studied wealth creation, and since the cotton gin, most growth above the cost of capital has been attributable to innovation, not good management.   Accordingly, stock market growth rates are dependent on whether you believe the inovation rates are sustainable and whether the global capital markets will be where the innovation gets its seed funds (share captured by public market  vs private venture funding participants).

Anyway, there are few alternatives for passive investors, and fortunately most folks are not saving, which juices our returns, even if somewhat reduced from declining innovation or a greater share going to private capital.

I agree with you, but economic growth is only relevant in as much as it affects earnings.  Low interest rates have driven prices up.  That's made PE ratios pretty low, so even with economic growth above normal levels, it would take a while (eg a decade) for prices and earnings to get back in sync.  I don't think the experts are saying the game has changed, just that the next decade will be mediocre in terms of returns. 

Also, I don't think the Bogle quote specifically was suggesting anybody move all their assets out of stocks, even if other parts of the article do.  You can just as easily read his quote as saying that people should just stay the course but plan for low returns for the next few years.