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See how a dollar would have grown over the past 94 years [pdf]

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Re: See how a dollar would have grown over the past 94 years [pdf]

#111

Post by throw0101c »

floundy wrote: post #54
jameslk wrote: post #31

Earlier quoted context omitted.

On the timescale of 30 years for gov bonds vs diversified US stocks, this is almost meaningless statement. The longer a risky asset is held, the less chance of loss you’ll have. Short-horizon returns are extremely volatile, but that volatility "mean-reverts" over time. This is especially true for stocks vs bonds. Because the cash flows of bonds are fixed, prolonged inflation or rate spikes can deliver a loss that sta…

The Nikkei 225 is still below its peak value from December of 1989. The US is an outlier in terms of historical average stock market returns and there is no guarantee this outperformance will continue into the future. Actually I'd say it's less likely, given that should it continue, the US market cap will eat the entire world stock market. The US stock market is currently 62% of the world's stock market capitalizatio…

> The Nikkei 225 is still below its peak value from December of 1989.

Okay, and how many people put 100% of their money in at December of 1998? Versus how many people have been dollar cost averaging for the last 30+ years?

* https://ofdollarsanddata.com/now-do-japan/

Further, it's not like the US is immune to long periods of minimum returns:

* https://www.forbes.com/sites/investor/2010/12/17/the-lost-de...

Perhaps these examples are a lesson for what's important: diversification.

Re: See how a dollar would have grown over the past 94 years [pdf]

#112

Post by throw0101c »

d_burfoot wrote: post #69

Note that the government has huge incentives to downplay the inflation rate. Over the time period of the graph, the price of gold went up by about 100x; I would consider that a more accurate estimate of inflation than the 18x number implied by the chart. Due to the way exponentials work, you can hide a lot of inflation over 100 years by claiming the annual rate is just half a percent lower than it really is.

> Note that the government has huge incentives to downplay the inflation rate. Over the time period of the graph, the price of gold went up by about 100x; I would consider that a more accurate estimate of inflation than the 18x number implied by the chart.

The CPI is one of the most studied and examined statistics that the government releases. Everyone from hyper-capitalist financial traders to leftist unions folks (because of CoL contract provisions) examine in and none of these folks who have a vested interested in calling out fraud have stepped forward.

There have been numerous peer-reviewed examinations about it, including open source code:

* https://en.wikipedia.org/wiki/MIT_Billion_Prices_project

There are disagreements about the "best" way to measure certain things (e.g., owner-occupied housing), but for the published methodology there is no cooking of the books that anyone without a tinfoil hat can find.

A recent profile of how the BLS does things:

* https://www.washingtonpost.com/opinions/interactive/2024/joh...

* http://archive.is/https://www.washingtonpost.com/opinions/in...

(Included as a chapter in the recent Michael Lewis (of Big Short fame) book Who Is The Government?)

And regarding gold specifically, there have been periods (that stretch over decade(s)) where gold has been flat, especially in inflation-adjust terms:

* https://graphics.thomsonreuters.com/11/07/CMD_GLDNFLT0711_VF...

The fact that it just happened to pop up over the last 2-3 years is recently bias. Your returns would have been highly dependent on when you got in for each (use slider):

* https://www.macrotrends.net/2608/gold-price-vs-stock-market-...

Re: See how a dollar would have grown over the past 94 years [pdf]

#114

Post by throw0101c »

ty6853 wrote: post #6

If we're allowed to cherry pick years, now do gold https://sprott.com/media/3783/fig1-jh-gold-perf.png

Heres a site with a slider where you can pick arbitrary start and end times:

* https://www.macrotrends.net/2608/gold-price-vs-stock-market-...

Re: See how a dollar would have grown over the past 94 years [pdf]

#115

Post by tmtvl »

Lerc wrote: post #74
ryandrake wrote: post #43

Earlier quoted context omitted.

> On the timescale of 30 years for gov bonds vs diversified US stocks, this is almost meaningless statement. The longer a risky asset is held, the less chance of loss you’ll have. Short-horizon returns are extremely volatile, but that volatility "mean-reverts" over time. This is only true if you look back 30 years. What will happen in the next 30 years? Do you know for sure?

I guess the questions to be asked would be Will the US economy completely collapse in the next 30 years? Will the US government completely collapse in the next 30 years. For the past century I think the answers to those questions would have been, "Almost certainly not" and "Not a chance in hell" I honestly didn't know where they stand today, but there's definitely been movement.

The past century, you say... wasn't there a little thing called 'the great depression' somewhere around a century ago?

Re: See how a dollar would have grown over the past 94 years [pdf]

#116

Post by throw0101c »

mjburgess wrote: post #56
ashdksnndck wrote: post #33

Earlier quoted context omitted.

The title doesn’t mention owning stock on margin.

But nor does it include owning stocks in companies that go out of business, or indeed, nations.

> But nor does it include owning stocks in companies that go out of business, or indeed, nations.

Which is why you invest in the entire market, internationally diversified. There are now funds (mutual/ETF) that allow you to do this with a single purchase:

* https://www.finiki.org/wiki/Asset_allocation_ETF

Re: See how a dollar would have grown over the past 94 years [pdf]

#117

Post by throw0101c »

lootsauce wrote: post #8

now do purchasing power of the dollar https://fred.stlouisfed.org/series/CUUR0000SA0R

> now do purchasing power of the dollar

… if the dollar is literally stuffed in a mattress or buried in jars in your backyard. Which is not the point of a currency.

Having it drop in value—at a modest, predictable rate—is arguably a good thing:

> No currency should be able to buy the same basket of goods over very long timespans through hoarding. If you want to retain the purchasing power of your money, it should participate in society via investment.

* https://twitter.com/dollarsanddata/status/159265180975079833...

Re: See how a dollar would have grown over the past 94 years [pdf]

#118

Post by throw0101c »

ty6853 wrote: post #16
p_j_w wrote: post #14

Earlier quoted context omitted.

Now do frequency of recessions, depressions, and panics.

You mean like the great depression which happened not long after formation, which some prominent economists have argued was exacerbated by the fed? Things did stabilize quite a bit after we bombed the rest of the industrial world into oblivion, though, creating a period of prosperity roughly equal in expansion to the period from the end of the civil war to before the creation of the fed.

> You mean like the great depression which happened not long after formation, which some prominent economists have argued was exacerbated by the fed?

The tight monetary policy of the Fed (dictated by the rules of then-orthodox gold standard) made the Great Depression worse:

* https://www.nber.org/books-and-chapters/financial-markets-an...

And it was only after leaving the gold standard that countries started to recover:

> In the end, recovery from the Great Depression does not begin until countries give up on the combination of the Bagehot Rule and of commitment to sound gold-standard finance. Those countries that have central banks willing to print up enough money so that people are willing to spend it--it is when you adopt such policies that your economy begins to recover. If you don’t, you become France, which sticks to the gold standard all the way up to 1937, and never gets a recovery. When World War II begins, Nazi Germany’s production--equal to France's in 1933--had doubled between 1933 and 1939. French production had fallen by 15%.

* https://delong.typepad.com/delong_long_form/2013/10/the-grea...

It was the 'sound money' orthodoxy that everyone adhered to that made things bad, and not the Fed specifically. It's not like things were any more stable pre-Fed:

* https://en.wikipedia.org/wiki/Panic_of_1873

* https://en.wikipedia.org/wiki/Panic_of_1893

* https://en.wikipedia.org/wiki/Panic_of_1896

* https://en.wikipedia.org/wiki/Panic_of_1907

And the "Great Depression" used to refer to something else pre-1930s:

* https://en.wikipedia.org/wiki/Long_Depression

It should also be noted that how the Fed (or any central bank) was run one hundred years ago, and how it/they are run now, are two different things. We've learned a lot (sometimes through painful experience(s)) about how to run economy(s).

Re: See how a dollar would have grown over the past 94 years [pdf]

#119

Post by [deleted] »

floundy wrote: post #64
andrewmcwatters wrote: post #28

Earlier quoted context omitted.

No one spends percentages. You spend dollars. Differences in annual compounding are tremendous. I would even argue logarithmic scales on charts are rarely useful. They’re inappropriately used in financial charts all the time.

This comment is a microcosm of how HN is essentially indistinguishable from Reddit nowadays in the quality of discussion.

[deleted]

Re: See how a dollar would have grown over the past 94 years [pdf]

#120

Post by Lerc »

tmtvl wrote: post #115
Lerc wrote: post #74

Earlier quoted context omitted.

I guess the questions to be asked would be Will the US economy completely collapse in the next 30 years? Will the US government completely collapse in the next 30 years. For the past century I think the answers to those questions would have been, "Almost certainly not" and "Not a chance in hell" I honestly didn't know where they stand today, but there's definitely been movement.

The past century, you say... wasn't there a little thing called 'the great depression' somewhere around a century ago?

Wasn't a complete collapse. It took a significant hit, but still functioned.
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