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Stock Market Returns Are Anything but Average

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Re: Stock Market Returns Are Anything but Average

#221

Post by mywittyname »

thehappypm wrote: post #200
Zr40 wrote: post #58

Earlier quoted context omitted.

> Where else are people meant to store money? Money isn't stored in other assets. It's transferred from the buyer of an asset to the seller. It doesn't cease to exist simply because you traded it for stocks (or gold or anything else). Now the seller has to deal with the consequences of holding the money you previously held. A rational trader factors in the costs of money when they price assets, therefore one doesn't…

This is always what I think of when I think of cryptocurrencies. You're not parking your money somewhere, you're giving it to someone else. Every time you buy BTC someone else is getting paid. Money goes in circles.

Two economists are sitting at a bar, one pulls out a checkbook and writes a check for $100,000,000 then hands it to the other economist. The second economist looks at the check, smiles, then hands it back.

The first economist calls the bartender over and orders a bottle of champagne. The bartender asks what the celebration is about, and the economist responds, "we just grew GDP by $200 million dollars."

Re: Stock Market Returns Are Anything but Average

#222

Post by malandrew »

muskox2 wrote: post #21
staticman2 wrote: post #12

Earlier quoted context omitted.

Except measuring the value of money as something other than the ability to provide consumption (the ability to buy things you consume, rather than investments) doesn't make sense, regardless of how fashionable it is on this site to throw around the term "asset inflation".

What is your explanation for the explosion in asset prices over the last year, if not inflation? Do you think the assets have become fundamentally more valuable?

One explanation is to look at the wood market. COVID restrictions have severely constrained supply and the wood suppliers are unable to keep up with demand.

Re: Stock Market Returns Are Anything but Average

#223

Post by ISL »

thisisnico wrote: post #204
ryandrake wrote: post #187

Earlier quoted context omitted.

> Now that cryptocurrency prices are listed right next to stock prices, many people don’t even understand that stocks are ownership shares in real businesses instead of just another ticker symbol to gamble on. This distinction is practically useless, unless you own enough shares to have even tiny sway at shareholder meetings. Owning 1/1000000000th of a company doesn't mean any extra value or power to you. The big dif…

Edit: (Some) Stocks that don’t pay dividends still pay you. Most stocks now don’t pay dividends. Either they reinvest in the business (growing the stock’s value) or buyback shares with extra cash, (alternative method to dividends as they’re returning value to you the shareholder.)

I'd preface that first sentence with "Some".

Some stocks that don't pay dividends (or buybacks, or reinvest) straight-up consume investor's capital.

Re: Stock Market Returns Are Anything but Average

#224

Post by [deleted] »

skystarman wrote: post #205
kingsuper20 wrote: post #177

Earlier quoted context omitted.

Personally, I'm not smart enough to pick individual stocks. At some point (perhaps now) Amazon growth is predicated on cannibalizing other companies. After all, the broad market can't exceed the GDP generally for the long term. My primary point here is not to argue about investment concepts, merely to state a concern about the artificiality of it all. Financialization is real and rather spooky.

The thing is there's a FRACTION of a percentage of people who are "good at picking stocks". Most PROFESSIONAL stock pickers don't beat the market. And those that do, a tiny fraction can do it consistently over a 5-10 year time frame. This is backed up by decades of data. But we still have millions of people who apparently think they are smarter than the thousands of professional stock-pickers who have MAs, PhDs and y…

[deleted]

Re: Stock Market Returns Are Anything but Average

#225

Post by ivankolev »

hamilyon2 wrote: post #56
Tangokat wrote: post #34

Earlier quoted context omitted.

Stock market returns make sense only when you realize the currency is actually just losing value. All currency is being devalued so you don't see it in currency pairs but scarce assets go up quickly.

I think that given how vast is USD influence, currencies all over the world will lose their value with dollar. But not every currency, economies that rely on mining natural resources more should have their currencies better against USD. This is not the case, as far as I can see.

Actually CAD is trending up against USD

Re: Stock Market Returns Are Anything but Average

#226

Post by simonbarker87 »

ahelwer wrote: post #6

There 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).…

Time in the market vs timing the market. The former is easier to do but you need to be patient, the second could give more gains but the chance of you timing the market right is basically zero

Re: Stock Market Returns Are Anything but Average

#227

Post by bko »

hobs wrote: post #195
ryandrake wrote: post #187

Earlier quoted context omitted.

> Now that cryptocurrency prices are listed right next to stock prices, many people don’t even understand that stocks are ownership shares in real businesses instead of just another ticker symbol to gamble on. This distinction is practically useless, unless you own enough shares to have even tiny sway at shareholder meetings. Owning 1/1000000000th of a company doesn't mean any extra value or power to you. The big dif…

There's a large difference, one of those is based on a pyramid scheme with no inherent value, and one is based on a company delivering value to customers. With the state of the stock market companies can and do go under, but generally those doing something for people dont magically disappear overnight (like any crypto certainly can.) That's it; that's the difference.

> There's a large difference, one of those is based on a pyramid scheme with no inherent value, and one is based on a company delivering value to customers.

Crypto is mostly a store of wealth, similar to a currency. It's inherit value is that it is fungible, transferrable and scarce. Unlike other currencies, the supply is not at the whims of fed officials and politicians. The difference is that you can't pay taxes directly in crypto. I like it as a hedge.

Do you believe all currencies are pyramid schemes with no inherent value as they're based on nothing?

Re: Stock Market Returns Are Anything but Average

#228

Post by skybrian »

WalterBright wrote: post #188
kingsuper20 wrote: post #163

Earlier quoted context omitted.

> It's purchasing an ownership claim on future earnings realized by the company. Which, as I said, can be realized via dividends or the sale of the company. I looked up their dividend returns. It ain't much. Keep in mind that tax law highly incentivizes the avoidance of dividends. We'll see (or maybe not). This business of involving the general public in stock ownership is a new thing, it really is new ground to cove…

> Keep in mind that tax law highly incentivizes the avoidance of dividends. Combining Biden's capital gains tax, Federal estate tax, Biden's stepped up basis for estates, Washington state's estate tax, and Washington state's new capital gains tax, the top estate tax rate is now 70%. This ensures that tax planning will dominate investment strategies, which usually results in suboptimal investing and subsequently a low…

Whatever changes you think investors might react to need to be discounted by the likelihood of them being in a bill passed by Congress.

It’s not something I know a lot about, but it seems likely that Congress will make substantial changes to Biden’s proposals?

Re: Stock Market Returns Are Anything but Average

#229

Post by selimthegrim »

boringg wrote: post #216
EVa5I7bHFq9mnYK wrote: post #182

Earlier quoted context omitted.

There is also no basis for such a belief in the casino games.

Actually there is a basis for it in blackjack and how to card count. That said I'm not sure what casino's are doing these days ever since the card counting was figured out.

They use a decent size shoe of several decks and reshuffle more than just in between rounds. Furthermore, the dealer only deals from a subset of the shoe IIRC.

Re: Stock Market Returns Are Anything but Average

#230

Post by dnautics »

PragmaticPulp wrote: post #124
lotsofpulp wrote: post #110

Earlier quoted context omitted.

> You could argue that the entire market is a mania. Objectively, the big publicly listed companies are growing and have stellar financials. I can think of no better place for someone to invest, other than maybe diversifying into real estate with high demand, if they already have a significant amount invested in public equity markets. Public equity market prices are also backed by the federal government, at least on…

I think a lot of newcomers to stock investing in the past year have been given the wrong ideas about the stock market. When all of the headlines are about GameStop and Nokia and AMC and some kid who made it lost a lot of money on RobinHood, the stock market can feel like a place for gambling. Now that cryptocurrency prices are listed right next to stock prices, many people don’t even understand that stocks are owners…

> It’s unfortunate, because they stand to lose a lot over the course of a lifetime of investing.

On the other hand, it's worth gambling in stocks because if you don't your going to lose your shirt in the upcoming inflation, so you might as well roll the dice and shot your shit at not winding up poor.

Especially since there are tax increases targeted at the rich coming down the pike that are going to absolutely destroy you if you are middle class or poor, when a mcdouble costs $20 instead of $2 and the minimum wage is $100/hr instead of $15

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