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Investing Returns on the S&P500

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Re: Investing Returns on the S&P500

#251

Post by turar »

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…

>> If the US has, in fact, "finished" developing, then the future of the S&P will be bleak.

Most of S&P are global corporations. They're considered American simply by virtue of having headquarters in the US.

Re: Investing Returns on the S&P500

#252

Post by vm »

tunesmith wrote: post #245

The other reason none of these returns are realistic for an average person: 1) People don't get a lump sum at the beginning of their investment history 2) Ah, but you say, dollar-cost-averaging. The problem there is that people get more money to invest when times are good, and less when times are bad. 3) As a result, even when buying in responsibly, people are buying more when the market is high, and less when the ma…

A lot of companies offer retirement plans where a % of income is invested monthly, a la dollar cost averaging (e.g. 401k plans). It's really easy to set up and let ride on autopilot.

Re: Investing Returns on the S&P500

#253

Post by cesarbs »

varjag wrote: post #180
lintiness wrote: post #28

Earlier quoted context omitted.

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?

I think they're referring to the fact that the Russian stock market collapsed completely (i.e. total loss) in the beginning of the 20th century.

Re: Investing Returns on the S&P500

#254

Post by cesarbs »

cmrdporcupine wrote: post #128
tim333 wrote: post #125

Earlier quoted context omitted.

>There's no reason to expect the social forces that underly market returns will deliver the same returns in the future. Except human nature is the same, economics is the same.

Except that people didn't live under a capitalist economic system with stock exchanges, shares, and private property for the 10000 years of settled urban existence before the 18th century, so, yeah -- apparently "economics is the same" isn't true.

I suggest you read A Splendid Exchange. Although humanity didn't have the exact same economic system as today's, it's a mistake to think there weren't complex systems in place in the past.

Re: Investing Returns on the S&P500

#255

Post by AceJohnny2 »

rando18423 wrote: post #209
Evolved wrote: post #192

Earlier quoted context omitted.

Who do you think created HFT (High Frequency Trading) systems? Surely bankers stick to banking but hire developers to give them that competitive edge. The odds are that software engineers would have come up with the idea of and implementation of, a working high frequency trading system before bankers would have despite banking probably not being a software engineer's specialty.

I think market makers used technology to do exactly what they've always done at increasingly higher speeds. History also shows you're wrong, for hundreds of years market makers have sought an edge by trying to get information faster and faster. Hell, it used to be carrier pigeons that gave them the edge. There's really not much new here...

> for hundreds of years market makers have sought an edge by trying to get information faster and faster.

And then it spurred the telegraph, and then the telephone, and then... :)

Re: Investing Returns on the S&P500

#256

Post by jgalt212 »

charlesdm wrote: post #134
jgalt212 wrote: post #115

Earlier quoted context omitted.

> Understand the market, understand the product and technology well, and you can do significantly better than any wall street analyst. Don't rush into it, but do your research. Look at the numbers and the growth potential. This is very dangerous advice because it just ain't true. Under efficient markets, you can do equally well as "any wall street analyst"

1. Markets aren't efficient. They're full of emotion and greed. They can be irrational. Just look at Brexit - even stocks that had zero exposure to the UK (directly or indirectly) sold off significantly. 2. Why would you assume you can't do better than an analyst, in your area of expertise? Someone who understands tech well will be able to make better tech investments, than, let's say, investments in mining. That see…

Markets are efficient because you cannot effectively predict how long emotion, greed, and irrationality will drive the bus before rationality once again prevails.

Re: Investing Returns on the S&P500

#258

Post by choosername »

hockley wrote: post #216
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.

Hehe, depending on the setting in sci-fi stories, that doesn't play out well, politically, and a lot of spending goes to the military.

Re: Investing Returns on the S&P500

#259

Post by kevinpet »

jonknee wrote: post #149
SilasX wrote: post #123

Earlier quoted context omitted.

And then that index fund has to take the loss that comes with having bought a stock that failed and sell at a loss, while not capturing the gains of stocks that got big enough to make it on the index. Shouldn't the index "return" thus diverge from the return of an actual index fund in practice given enough years?

That's not how it works, the return of the index is the actual return of the included stocks while they are in the index . There will be winners and losers, but the return is actually what you get.

The return of the ETF is only as good as what the portfolio managers can accomplish in reality. They are very good at this, but the cost is there. It's referred to as tracking error.
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