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Investing Returns on the S&P500

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Re: Investing Returns on the S&P500

#171

Post by dharma1 »

kspaans wrote: post #133
dharma1 wrote: post #57

Earlier quoted context omitted.

+1 on ETFs. And I guess, think about at what point in the cycle you want to invest in equities. They are quite highly priced at the moment.

Market timing is a fool's game. Find out the right asset allocation for your personal risk tolerance and retirement goals, stick your money in, rebalance annually (contribute monthly if fees are low), and then sit and wait.

As a general rule yes. But if you are thinking of sticking a large amount of cash in the stock market right now and plan to stay in long term, I would at least give it a shot in terms of trying to time it right in the cycle.

Right now we are quite high in the cycle - 9 years from the last crisis, end of QE, slowing growth - so at least in my view, it's an asymmetric bet to wait and see. But what do I know.

Re: Investing Returns on the S&P500

#172

Post by edanm »

socrates1998 wrote: post #168

There are a lot of issues with this data. 1) Last 100 years has ZERO chance to be the same as the next 100 years. 2) The SP 500 adds and subtracts companies as they grow, fold and go bankrupt. So the only way this would be maybe work is if you invested in the ETF. 3) Macro-economic events are notoriously hard to predict and anticipate, and your returns are very much tied to how you time your entry point. If you inves…

I totally disagree with your points.

"2) The SP 500 adds and subtracts companies as they grow, fold and go bankrupt. So the only way this would be maybe work is if you invested in the ETF."

First of all, it's not the ETF, it's an ETF. And this isn't exactly news - this is the basic method of investing always recommended (alternatively, an index fund, which is similar).

"3) Macro-economic events are notoriously hard to predict and anticipate, and your returns are very much tied to how you time your entry point. If you invested in the beginning of 2008, you would have a 33% return, same for a 2001 entry. In the beginning of 2009, around 100%."

Well, yes, but this is kind of the point of the article. It shows what is the chance of coming out ahead out of any 20 year period in the last 100 years.

"This is the problem that you get when Warren Buffet fools you into "buy and hold". Yes, it has worked for him, but he is an insanely great investor. You can't replicate his returns. You can't even sniff his returns."

Warren Buffet doesn't "buy and hold", but he recommends it for most people exactly because it's relatively easy, and gives you very good returns.

Re: Investing Returns on the S&P500

#173

Post by runako »

Retric wrote: post #48
sks wrote: post #40

Earlier quoted context omitted.

You dont get taxed until you sell. The performance shown here is for a buy and hold strategy.

Dividends are also taxed, so even reinvesting has a cost. Granted, IRA/401k etc exist and in years with 0-3% it's not that big a deal, but over 20 years it's often a significant cost.

Dividends are not taxed in tax-deferred accounts like IRA/401(k).

Re: Investing Returns on the S&P500

#174

Post by [deleted] »

arcticfox wrote: post #166
Redoubts wrote: post #142

Earlier quoted context omitted.

> That remains to be seen What would a more powerful USA look like? It doesn't appear that the country is after an empire the same way the British had one 100 years ago, so raw aggression is out. I can't imagine a realistic scenario that doesn't require the implosion of other nations to embiggen America.

An even more wealthy USA? Imagine one of those horror scenarios where robots / automation start taking over many, many jobs and the multinationals that own them are based out of the US. Not saying it would happen but I think that's one scenario that would be even "more powerful".

[deleted]

Re: Investing Returns on the S&P500

#175

Post by loeg »

dap wrote: post #153

The NYTimes has a great visualization of S&P 500 returns for money invested any year between 1920 and 2009 and withdrawn between 1921 and 2010: http://www.nytimes.com/interactive/2011/01/02/business/20110...

I saw that visualization back in 2011 and I think it's actually a pretty poor one. It uses shades of red for what are objectively not bad outcomes (return greater than inflation is red, real return between 3 and 7% is pink). IMO that's misleading.

It would be helpful if it compared against the same visualization for other straightforward market investments, like bonds, or savings accounts / CDs. Those asset classes would be red (or pink for long-term bonds, perhaps) across the board. Stocks look great in comparison.

But picking a slightly more reasonable color scale would help.

Re: Investing Returns on the S&P500

#176

Post by Retric »

runako wrote: post #173
Retric wrote: post #48

Earlier quoted context omitted.

Dividends are also taxed, so even reinvesting has a cost. Granted, IRA/401k etc exist and in years with 0-3% it's not that big a deal, but over 20 years it's often a significant cost.

Dividends are not taxed in tax-deferred accounts like IRA/401(k).

Yes, that's why I mentioned them. Sorry, if I was not clear, though they also generally have associated fees. So again, nominal breakeven is not the same as actual breakeven.

Re: Investing Returns on the S&P500

#177

Post by darawk »

JackFr wrote: post #23
jakozaur wrote: post #12

I 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,…

> USA is superpower at the peak. That remains to be seen > Argentina used to be richest country in the world. That is not true. In the early 20th century they were top 10, but never surpassed Britain or the US in GDP per capita.

> That remains to be seen

The fact that it remains to be seen is kind of the point. It is possible that it is at peak, and if it is true, then it is likely that historical data is not very useful in understanding market returns.

Re: Investing Returns on the S&P500

#178

Post by [deleted] »

JackFr wrote: post #23
jakozaur wrote: post #12

I 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,…

> USA is superpower at the peak. That remains to be seen > Argentina used to be richest country in the world. That is not true. In the early 20th century they were top 10, but never surpassed Britain or the US in GDP per capita.

[deleted]

Re: Investing Returns on the S&P500

#179

Post by secondhandvape »

dap wrote: post #153

The NYTimes has a great visualization of S&P 500 returns for money invested any year between 1920 and 2009 and withdrawn between 1921 and 2010: http://www.nytimes.com/interactive/2011/01/02/business/20110...

Excellent visual, I would love to see this updated for 2016.

You can see that there are quite a few vertical slices where you will always result in a positive return. It's just a matter of how long you are willing to hold your money, and for what kind of return. That's why I'm attracted to index funds for investing.

How do people feel about investing in the SP500 right now? I'm not too bullish considering the current peak and the US political future.

https://www.google.com/finance?q=INDEXSP:.INX

Re: Investing Returns on the S&P500

#180

Post by varjag »

lintiness wrote: post #28
vanderfluge wrote: post #3

I'd be curious to see results for other countries, the graph of "Chance of Losing in the Stock Market" in particular. In the case of Japan, it appears that if you'd still have significant losses if you invested 25-30 years ago: https://finance.yahoo.com/echarts?s=%5En225+Interactive#{"ra...

this is the biggest fallacy in the investing thesis. buy and hold didn't work in russia, or argetina, or many others. because we live in a country that's prospered (for a plethora of reasons), we assume the prosperity must continue unabated forever.

Would investment in a Russian market managed fund panned out any better?
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