Stock Market Returns Are Anything but Average
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Stock Market Returns Are Anything but Average
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Re: Stock Market Returns Are Anything but Average
#2I mean, just look at last year, when the S&P 500 index plunged over 30%, then proceeded to nearly double from then until now, in the midst of a global pandemic that froze big chunks of the world economy. Stock market returns make no sense.
Re: Stock Market Returns Are Anything but Average
#3I mean, just look at last year, when the S&P 500 index plunged over 30%, then proceeded to nearly double from then until now, in the midst of a global pandemic that froze big chunks of the world economy. Stock market returns make no sense.
I’ve made 15% on an 80/20 VWRA/IGLA split since September 2020. It scares me. It feels like too much. Like it’s going to pop.
Re: Stock Market Returns Are Anything but Average
#4I mean, just look at last year, when the S&P 500 index plunged over 30%, then proceeded to nearly double from then until now, in the midst of a global pandemic that froze big chunks of the world economy. Stock market returns make no sense.
The jump was probably caused by the 2.3 trillion in MBSes and treasuries bought by the fed.
Re: Stock Market Returns Are Anything but Average
#5I mean, just look at last year, when the S&P 500 index plunged over 30%, then proceeded to nearly double from then until now, in the midst of a global pandemic that froze big chunks of the world economy. Stock market returns make no sense.
Instead of seeing as high returns, you can also look at it as money losing value due to excessive printing of last year.
Re: Stock Market Returns Are Anything but Average
#6There are all sorts of interesting facts you can pull out of this, like how if you missed the top 10 best days in the market from 1999-2019, your return was cut in half. If you missed the top 20 best days, you actually lost money: https://www.fool.com/investing/2019/04/11/what-happens-when-...
Basically never mistake annualized return over a long period of time for your expected return in a given year (or day, etc). There will be some really really good years, and a few really really bad years. If something grows consistently with low variance over a long period of time, that's a red flag! It's likely to be a "picking up pennies in front of a steamroller" type trade.
Re: Stock Market Returns Are Anything but Average
#7I mean, just look at last year, when the S&P 500 index plunged over 30%, then proceeded to nearly double from then until now, in the midst of a global pandemic that froze big chunks of the world economy. Stock market returns make no sense.
they totally make sense. The money supply increased from 12T to 20 trillion under trump. The money supply under biden is about to increase another 5T.
We are seeing the effects of the increase in money supply as inflation in the price of equities.
Re: Stock Market Returns Are Anything but Average
#8I mean, just look at last year, when the S&P 500 index plunged over 30%, then proceeded to nearly double from then until now, in the midst of a global pandemic that froze big chunks of the world economy. Stock market returns make no sense.
It starts to when you ask yourself: Where else are people meant to store money? Since interest rates and bond rates were at historical lows. So you have people who are looking at 10% YOY returns on one hand and 0.2%/2% on the other and making the rational decision.
Does this make stocks overinflated? Yes. Is it going to suddenly pop? Unlikely, since the conditions that caused it won't suddenly change (e.g. certain bonds have ticked up 1%~ but taken months).
Re: Stock Market Returns Are Anything but Average
#9I mean, just look at last year, when the S&P 500 index plunged over 30%, then proceeded to nearly double from then until now, in the midst of a global pandemic that froze big chunks of the world economy. Stock market returns make no sense.
Instead of seeing as high returns, you can also look at it as money losing value due to excessive printing of last year.
Exactly. Same with housing. They are not more valuable, the dollar is less valuable relative to them and likely will only get worse as equities and real estate are the good hedges against inflation, causing a positive feedback loop.
Higher interest rates would create an incentive for traditional savings, but would destroy companies (and gov) holding big debts.
Re: Stock Market Returns Are Anything but Average
#10I mean, just look at last year, when the S&P 500 index plunged over 30%, then proceeded to nearly double from then until now, in the midst of a global pandemic that froze big chunks of the world economy. Stock market returns make no sense.
Stocks market returns only represent the return of the companies that are listed on stock exchange. If the economy stagnates overall but the small (unlisted) companies suffer while the big (listed) ones boom, then the stock market returns increase in a stagnating economy but it makes sense.
The problem here would be the belief that stock market is a mirror of the main economy. Personally, I believe the stock market represents very well the interest of the richest capitalists.