Investing Returns on the S&P500 • Hacker News Board

Re: Investing Returns on the S&P500

#341

Post by whamlastxmas » Thu, Jun 30, 2016, 3:29 PM UTC

tanderson92 wrote: post #306

whamlastxmas wrote: post #214

Earlier quoted context omitted.

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.

VFIAX is a mutual fund. Vanguard holds a patent which allows a dual share class, where the ETFs and mutual funds share the same pool of securities. This allows share conversions from mutual fund->ETF, interestingly. http://www.ft.com/cms/s/0/3e0cc962-ec0c-11e4-b428-00144feab7...

Not exactly a good argument for mutual funds being the same cost as ETFs though. It's only technically a mutual fund from what I can tell. I see your point though.

Re: Investing Returns on the S&P500

#342

Post by dismal2 » Thu, Jun 30, 2016, 4:18 PM UTC

greedo wrote: post #274

vm wrote: post #252

Earlier quoted context omitted.

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.

But that still skews the dollars invested. At age 22 (college grad) you might make $50K. You put in 6% and get a 3% match, for $4500 into your retirement fund. Fast forward to age 50, when you're making 200K (this is 28 years from now, so inflation and pay raises bump you very high), you're putting in the same %, but that equates to $18K/year. So even with dollar cost averaging, the majority of your money is invested…

is your planet accepting applications?

Re: Investing Returns on the S&P500

#343

Post by tanderson92 » Thu, Jun 30, 2016, 5:48 PM UTC

whamlastxmas wrote: post #341

tanderson92 wrote: post #306

Earlier quoted context omitted.

VFIAX is a mutual fund. Vanguard holds a patent which allows a dual share class, where the ETFs and mutual funds share the same pool of securities. This allows share conversions from mutual fund->ETF, interestingly. http://www.ft.com/cms/s/0/3e0cc962-ec0c-11e4-b428-00144feab7...

Not exactly a good argument for mutual funds being the same cost as ETFs though. It's only technically a mutual fund from what I can tell. I see your point though.

Vanguard's Admiral share mutual funds almost never differ in cost from their ETFs.

As for it only "technically" being a mutual fund: consider that VFIAX predates VOO by 10 years. How does that square with VFIAX only "technically" being a mutual fund, when presumably it was a real, honest mutual fund in the years 2000-2010 (before VOO was introduced)

Re: Investing Returns on the S&P500

#344

Post by mac01021 » Thu, Jun 30, 2016, 8:26 PM UTC

paganel wrote: post #262

mac01021 wrote: post #17

Earlier quoted context omitted.

So what alternative method do you propose for predicting growth (or decline) over the next century?

A crystal ball. Seriously now, this is like asking: What methods do you propose for building a perpetuum mobile? This Universe does not allow for the future to be predicted, like it doesn't allow for the laws of TD to be broken. All the predictions of growth/decline you read/hear from people are just educated guesses, nothing else. Some of them might get lucky with their predictions, some of them might not, but let's…

This is a strange reply.

You're saying we can't understand the world through science?

Physical laws like the laws of thermodynamics are methods for predicting the future that we obtain by inferring them from what we've observed in the past.

You can argue that particular domains (like the global economy) are nearly impossible to predict with much accuracy because we are unable to observe many of the driving variables and the underlying causal structure is too complicated for us to comprehend the laws of the system's behavior. But to say that, in general, the universe does not allow forecasting the future seems really weird.

Re: Investing Returns on the S&P500

#345

Post by dredmorbius » Thu, Jun 30, 2016, 9:10 PM UTC

coupdetaco wrote: post #197

xiaoma wrote: post #184

Earlier quoted context omitted.

> "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…

But we live in the best of all possible worlds!

The question being, is that what I believe, or fear?

Re: Investing Returns on the S&P500

#346

Post by dredmorbius » Thu, Jun 30, 2016, 9:27 PM UTC

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...

That's from Ed Easterling's Crestmont Research. Easterling's updated the matrix since:

http://www.crestmontresearch.com/stock-matrix-options/

Re: Investing Returns on the S&P500

#347

Post by dredmorbius » Thu, Jun 30, 2016, 9:32 PM UTC

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…

I'd suggest taking a look at Robert Gordon's The Rise and Fall of American Growth. Gordon's coverage of past technology and both the mode and extent of impacts, and of recent developments, including information technology medicine, and other areas, is sobering.

And that's despite disagreeing with Gordon fairly strongly in a number of other areas.

Vaclav Smil and Manfred Weissenbacher both have excellent books describing the impacts of technolgy, and especially energy, on history. I strongly suspect that's the most significant component.

Gordon's book is part of a larger series much of which addresses the question of why concerning the Industrial Revolution and the absolutely unprecedented growth of the past 250 years or so, much of that occurring only in the 20th century. It's hardly the only treatment of that phenomenon, but I do agree with Gordon, and others, that it's perhaps the most pressing question, still unanswered, of economics.

Re: Investing Returns on the S&P500

#348

Post by dredmorbius » Thu, Jun 30, 2016, 9:35 PM UTC

turar wrote: post #251

xiaoma wrote: post #184

Earlier quoted context omitted.

> "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.

This only shifts the question as to whether or not the rest of the world can emulate the growth of the United States, and if so, where specifically and to what extent.

Re: Investing Returns on the S&P500

#349

Post by dredmorbius » Thu, Jun 30, 2016, 9:50 PM UTC

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…

It gets worse: people buy when times are good and sell when times are bad, if they've not held enough liquidity. This tends to amplify buying prices and depress selling prices.

It's also a strong reason to maintain liquidity and keep your nut (recurring expenses) low.

The dynamic turns up in a number of other areas. Natural resources markets: extractors are often pressed to provide more supply when prices fall because they've a large fixed cost structure, often loans, and the resource is all they have to sell. Monopolisation or cartelisation, or government-regulated stockpiles, are a common response (Standard Oil, the As-Is agreement, the TRO/Dept. of Interior quota program, Naval / Strategic oil reserve -- see also Tea Pot Dome scandal, Harbord list, OPEC). Farmers will double down in drought, see Ken Burns and Tim Egan on the Dust Bowl. Migrant or refugee labour (Dust Bowl and others).

Economic agents -- persons, groups, firms -- face both short-term essential and long-term cost structures. They can operate, for a time, below long-term costs, but only at the cost of degrading their long-term capabilities. They'll do so because if they fail to meet short-term needs, they die.

It's a tremendous market distortion. Perhaps one that drives the entire modern economy.

Re: Investing Returns on the S&P500

#350

Post by disordinary » Thu, Jun 30, 2016, 10:24 PM UTC

malloryerik wrote: post #326

disordinary wrote: post #226

Earlier quoted context omitted.

The USA has a huge empire, probably the largest ever seen, but it's not an empire of government expansion it's an empire built by companies and culture.

Empire is the wrong term. It's misleading, it's fraught, it leads to lazy thinking, facile notions and comparisons, and can facilitate unjustified anti-Americanism on one side, cavalier adventurism on another (think Cheney, neocons, AEI), and perhaps isolationism in a current sense ("we're an empire but we shouldn't be"). "Superpower" is better.

What constitutes an empire though, the US is more than twice the size of the Roman Empire at it's peak. Surely that is not an empire?

It also influences other countries to an extent which is similar to other empires like the British did. It invades countries to keep trade going, and it's companies dominate the world much like the companies of the British empire did.

The only difference is that the US has finished expanding.

So what really constitutes an empire? Does it need an emperor? Does it need to constantly be questing to expand in lands?