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Investing Returns on the S&P500

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Re: Investing Returns on the S&P500

#211

Post by tunesmith »

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The NYTimes has a great visualization of S&P 500 returns for money invested any year between 1920 and 2009 and withdrawn between 1921 and 2010: http://www.nytimes.com/interactive/2011/01/02/business/20110...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 brought up this chart as a counterpoint to the OP's graph in a separate discussion.

The difference is that this one factors in "taxes and fees".

In this chart, it says 1979-1999 is +8.2% per year.

Using the OP's data source, 1979-1999 would be 12.464% (using https://dqydj.com/sp-500-return-calculator/ which uses the same Schiller data set).

That's 4.2% per year obliterated by "taxes and fees". That seems excessive for "taxes and fees", given that it's buy-and-hold.

I don't know what to make of this discrepancy but I find it aggravating. Either Schiller's data has some strange assumptions built into it, or the OP's analysis draws improperly bullish conclusions from it, or the NYT chart is unreasonably bearish.

Either way, I still strongly believe people should not be generally expecting their investments to quadruple in 20 years. There's a whole investment industry that is based off of bad assumptions, and it's keeping people from investing in actually producing value for themselves and others.

Re: Investing Returns on the S&P500

#212

Post by zanny »

wernercd wrote: post #199
clock_tower wrote: post #186

Earlier quoted context omitted.

> What would a more powerful USA look like? Passenger rail; durable houses; less unemployment and more labor-force participation; a population not balkanized along political/cultural lines.

With an increase in immigration and a cheapening of robotic workers and kiosks... where is this decrease in unemployment and increase in labor-force participation going to come from? I mean, there is "always" going to be jobs for plumbers and spots for artisan made stuff... but those jobs aren't going to replace the amount of jobs that will be lost when $15 becomes more expensive than iRobot...

A UBI, supplied taxafion, and significant deregulation would enable citizens to participate in the economy on much more liberal terms and you would almost always see participation rates rise while total hours worked fall.

Re: Investing Returns on the S&P500

#213

Post by amaks »

xiaoma wrote: post #184
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,…

> "anywhere in developed world" I hate this terminology. If the US has, in fact, "finished" developing, then the future of the S&P will be bleak. I don't think that's the case at all, though. I think development has just started and we'll see fantastic advances in bio-informatics, solar power, 3D printing and a number of other fields in the upcoming decades. When I was a teenager, I pirated music. I seriously hope my…

US is far from finishing deveping, fortunately or unfortunately. Take trains, for example, area where US is far behind China, Japan, or European countries, despite the size of its territory. I'm sure there are other examples.

Re: Investing Returns on the S&P500

#214

Post by whamlastxmas »

xyience wrote: post #170
whamlastxmas wrote: post #87

Earlier quoted context omitted.

As other person pointed out, mutual funds are much more expensive.

It depends on the mutual fund and the ETF. For Vanguard 500, the VOO ETF and the VFIAX index fund are effectively the same, they even have the same expense ratio. The latter you need $10k upfront though. (VFINX, if you only have between $3k and $10k, has a higher expense ratio.)

VFIAX is not a mutual fund, it's just the "Admiral" class of the VOO ETF. Admirals shares offer lower expense ratios in many instances, but I guess the VOO expense was already at its floor.

Re: Investing Returns on the S&P500

#215

Post by vkou »

vox_mollis wrote: post #189
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.

It doesn't appear that the country is after an empire the same way the British had one 100 years ago US empire is defined more by squashing incipient threats to its global hegemony than by UK-style colony management.

UK-style colony management was also largely about access to colonial resources, and colonial markets. Colonial management was a means to that end.

The US empire is doing precisely that, through a mixture of soft and hard power.

Re: Investing Returns on the S&P500

#216

Post by hockley »

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,…

Space/Mars could start to be in play before the century is over. That's one example of a (literal) new frontier for growth.

Re: Investing Returns on the S&P500

#217

Post by darawk »

ryangittins wrote: post #206
darawk wrote: post #177

Earlier quoted context omitted.

> 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.

Couldn't you have made this same point at most times in modern American history? Wasn't it possible that the US was at its peak in 1970? Or 1980? Or 1990? I suspect it is only due to hindsight that we know it wasn't the peak then.

Yes, that's true. I'm not saying that the US is necessarily at its peak, just pointing out the fundamental problem with extrapolating based on historical data.

It assumes that the future will look like the past, even though there are some plausible reasons to think that it won't.

Some of those reasons would push you harder in the direction of investing in stocks (e.g. increasing automation, globalization) and some would push you in the opposite (e.g. declining gdp growth, rising inequality, political instability).

Re: Investing Returns on the S&P500

#218

Post by tbrooks »

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...

It's unclear if the NYT accounts for dividend reinvestment.

Leaving out compounding interest could massively affect the returns shown in the chart.

Re: Investing Returns on the S&P500

#219

Post by planteen »

kerryfalk wrote: post #118
Chris2048 wrote: post #96

Earlier quoted context omitted.

But how do you understand the market? Is looking at the company numbers enough, or do you have to look at companies in detail? Is domain knowledge enough, or do you need to look at corporate culture, people and business plans? How fast do you need to be, in term of reacting to events?

To answer your first question: be a part of it, either as a consumer or a producer. My professional life now revolves around mining. I'm confident to know who to invest in and who not to. My personal life centers around various hobbies - I'm confident I could choose a few companies in those spaces to invest in. Unfortunately, most of those are well performing private companies.

Just curious - are you worried about getting too coupled to the industry you work in? I try not to invest in tech since I work in tech. So a big downturn in tech would not only be bad for my job but also investments. Or would you possibly bet against mining?

Re: Investing Returns on the S&P500

#220

Post by jpmattia »

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).

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

Only if you never withdraw them.

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