Does the stock data used suffer from Surviver bias?
That is a free download of historical data that lacks failing, delisted companies of the past.
Investing Returns on the S&P500
11–20 of 357 posts
Re: Investing Returns on the S&P500
#12I don't think it is fair to say that next 100 years will be same as last 100 years:
1. GDP growth is not as high as it used to be anywhere in developed world: http://www.oecd.org/std/productivity-stats/oecd-compendium-o...
2. USA is superpower at the peak. Plenty of other stock market economies hasn't been so successful. E.g. Argentina used to be one of the richest country in the world. Investing in history is easy, e.g. you can also say about Apple stock that it will always recover based on past data, but plenty of other companies hasn't.
3. Most of the 100 years we have inflation: http://inflationdata.com/Inflation/Inflation_Rate/Long_Term_...
Right now interests rate are close to zero, which is rare. Long term trends may change if we continue to operate in those climate.
Edit: Inflation was factored in the graphs. Sorry I was wrong about that.
Re: Investing Returns on the S&P500
#13i've made simmiliar visulations in backtest app which shows returns on cash invested > https://itunes.apple.com/cz/app/backtest-stock-asset-portfol...
Re: Investing Returns on the S&P500
#14Would be more interesting to compare it against a realistic return from a savings account instead of saying "if the index is worth the same after 20 years then you haven't lost anything". You would have almost 25% more even in a 1.1% savings account.
I haven't seen a 1.1% savings account in the better part of a decade. Perhaps that's not useful to theorize about in the modern economic wonderland we've created.
Re: Investing Returns on the S&P500
#15I don't think it is fair to say that next 100 years will be same as last 100 years: 1. GDP growth is not as high as it used to be anywhere in developed world: http://www.oecd.org/std/productivity-stats/oecd-compendium-o... 2. USA is superpower at the peak. Plenty of other stock market economies hasn't been so successful. E.g. Argentina used to be one of the richest country in the world. Investing in history is easy,…
> So at Year 1, we take every point on the S&P500 curve, look at every point on the S&P500 that's one year ahead, add in dividends and subtract inflation, and record all points as a relative gain or loss for Year 1.
Point #3 is wrong.
Re: Investing Returns on the S&P500
#16Does the stock data used suffer from Surviver bias? That is a free download of historical data that lacks failing, delisted companies of the past.
This is a good question. The S&P 500 kind of dodges this question by its very nature.
The S&P 500 constantly changes the stocks it holds. So if a stock falls out of favor, say Sears, its dropped from the index.
It's also important to Note that comparing the S&P 500 from 100 years ago to today is very naive as the methodology for what it holds has changed significantly over the years.
Comparing the returns of the S&P 500 from 1900 to now is kind of like comparing the statistics of a baseball player from 1900 and now in isolation and using that as the sole determination of which player was better.
Re: Investing Returns on the S&P500
#17I don't think it is fair to say that next 100 years will be same as last 100 years: 1. GDP growth is not as high as it used to be anywhere in developed world: http://www.oecd.org/std/productivity-stats/oecd-compendium-o... 2. USA is superpower at the peak. Plenty of other stock market economies hasn't been so successful. E.g. Argentina used to be one of the richest country in the world. Investing in history is easy,…
So what alternative method do you propose for predicting growth (or decline) over the next century?
Re: Investing Returns on the S&P500
#18Would be more interesting to compare it against a realistic return from a savings account instead of saying "if the index is worth the same after 20 years then you haven't lost anything". You would have almost 25% more even in a 1.1% savings account.
I haven't seen a 1.1% savings account in the better part of a decade. Perhaps that's not useful to theorize about in the modern economic wonderland we've created.
If you live in Canada
Re: Investing Returns on the S&P500
#19I don't think it is fair to say that next 100 years will be same as last 100 years: 1. GDP growth is not as high as it used to be anywhere in developed world: http://www.oecd.org/std/productivity-stats/oecd-compendium-o... 2. USA is superpower at the peak. Plenty of other stock market economies hasn't been so successful. E.g. Argentina used to be one of the richest country in the world. Investing in history is easy,…
The author did explicitly factor in inflation.
Re: Investing Returns on the S&P500
#20Would be more interesting to compare it against a realistic return from a savings account instead of saying "if the index is worth the same after 20 years then you haven't lost anything". You would have almost 25% more even in a 1.1% savings account.
I haven't seen a 1.1% savings account in the better part of a decade. Perhaps that's not useful to theorize about in the modern economic wonderland we've created.