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Stock market charts you never saw (2021)

papers.ssrn.com

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Re: Stock market charts you never saw (2021)

#11

Post by dot1x »

metacritic12 wrote: post #9
nfcampos wrote: post #4

Revised follow-up paper https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3805927

It seems like this follow up paper clarifies the data's vision a lot more. Notable changes from the previous version discussed in a sister thread here: - There is no more emphasis on price-only-inflation-adjusted returns. Good riddance: getting rid of dividends makes no sense and is borderline intellectually dishonest just to make the point. - He no longer argues stocks don't work for the long run, just that bonds we…

> getting rid of dividends makes no sense and is borderline intellectually dishonest just to make the point

How so? Once you retire, you don't let dividends reinvest. Makes perfect sense.

Re: Stock market charts you never saw (2021)

#12

Post by flavius29663 »

dot1x wrote: post #2

An extremely interesting paper that puts into perspective a lot of investment "knowledge" shared at nauseom almost everywhere. > Investors have seen countless charts of US stock market performance which start in 1926 and end near the present. But US trading long predates 1926, and the foreshortened perspective that results from a focus on post-1926 data can be misleading. > The goal is to challenge shibboleths about…

> presumes an investor who never needs to spend the dividends or interest received. No real investor, individual or institution, has that luxury.

I don't understand this. It's like saying: I don't have the luxury to sell off some of my growth stock. It makes no sense, you sell when you need money, and you re-invest the dividends unless you need money, same thing.

Re: Stock market charts you never saw (2021)

#13

Post by jldugger »

recuter wrote: post #10

If I was alive in 1923 and stashed away $8 million in ̶c̶a̶s̶h̶ (Edit: 100y bonds) would only be worth about $140 million today. Had I put it into some fancy ETF (Recall Vanguard dates back only to 1975, but whatever) I'd be a billionaire. That's it, that is the entire difference of less than an order of magnitude. Don't reckon the nickels and the dimes matter much to centenarians. Most people don't even have $8000 t…

10x matters quite a bit in generational wealth terms. If every generation doubles the number of plausible claimants to the wealth, thats about what is needed to balance out.

On the other hand:

> If I was alive in 1922 and stashed away $8 million in cash it would only be worth about $140 million today.

Why would it not be worth $8 million?

Re: Stock market charts you never saw (2021)

#14

Post by whall6 »

dot1x wrote: post #11
metacritic12 wrote: post #9

Earlier quoted context omitted.

It seems like this follow up paper clarifies the data's vision a lot more. Notable changes from the previous version discussed in a sister thread here: - There is no more emphasis on price-only-inflation-adjusted returns. Good riddance: getting rid of dividends makes no sense and is borderline intellectually dishonest just to make the point. - He no longer argues stocks don't work for the long run, just that bonds we…

> getting rid of dividends makes no sense and is borderline intellectually dishonest just to make the point How so? Once you retire, you don't let dividends reinvest. Makes perfect sense.

There are enough “cash cow” securities that maintain a same / similar share price by distributing heavily for this to make sense. The price wouldn’t show the whole story and the cash could go much further over 100 years than just sitting in a bank account.

I don’t know many people that spend 100 years in retirement.

Re: Stock market charts you never saw (2021)

#15

Post by roflyear »

recuter wrote: post #10

If I was alive in 1923 and stashed away $8 million in ̶c̶a̶s̶h̶ (Edit: 100y bonds) would only be worth about $140 million today. Had I put it into some fancy ETF (Recall Vanguard dates back only to 1975, but whatever) I'd be a billionaire. That's it, that is the entire difference of less than an order of magnitude. Don't reckon the nickels and the dimes matter much to centenarians. Most people don't even have $8000 t…

What return are you assuming for cash?

Re: Stock market charts you never saw (2021)

#16

Post by Dylan16807 »

dot1x wrote: post #11
metacritic12 wrote: post #9

Earlier quoted context omitted.

It seems like this follow up paper clarifies the data's vision a lot more. Notable changes from the previous version discussed in a sister thread here: - There is no more emphasis on price-only-inflation-adjusted returns. Good riddance: getting rid of dividends makes no sense and is borderline intellectually dishonest just to make the point. - He no longer argues stocks don't work for the long run, just that bonds we…

> getting rid of dividends makes no sense and is borderline intellectually dishonest just to make the point How so? Once you retire, you don't let dividends reinvest. Makes perfect sense.

You should be taking money out at your chosen rate, not depending on how those companies choose to allocate money between dividends vs. buybacks vs. cash piles vs. reinvestment. So treating dividends as reinvested by default makes sense to me.

Re: Stock market charts you never saw (2021)

#17

Post by quickthrowman »

jldugger wrote: post #13
recuter wrote: post #10

If I was alive in 1923 and stashed away $8 million in ̶c̶a̶s̶h̶ (Edit: 100y bonds) would only be worth about $140 million today. Had I put it into some fancy ETF (Recall Vanguard dates back only to 1975, but whatever) I'd be a billionaire. That's it, that is the entire difference of less than an order of magnitude. Don't reckon the nickels and the dimes matter much to centenarians. Most people don't even have $8000 t…

10x matters quite a bit in generational wealth terms. If every generation doubles the number of plausible claimants to the wealth, thats about what is needed to balance out. On the other hand: > If I was alive in 1922 and stashed away $8 million in cash it would only be worth about $140 million today. Why would it not be worth $8 million?

It should read “If I was alive in 1923 and invested $8M in 100y bonds that return the exact rate of inflation, I’d have $140M today”

Plugging it into a USD inflation calculator checks out.

Re: Stock market charts you never saw (2021)

#19

Post by recuter »

jldugger wrote: post #13
recuter wrote: post #10

If I was alive in 1923 and stashed away $8 million in ̶c̶a̶s̶h̶ (Edit: 100y bonds) would only be worth about $140 million today. Had I put it into some fancy ETF (Recall Vanguard dates back only to 1975, but whatever) I'd be a billionaire. That's it, that is the entire difference of less than an order of magnitude. Don't reckon the nickels and the dimes matter much to centenarians. Most people don't even have $8000 t…

10x matters quite a bit in generational wealth terms. If every generation doubles the number of plausible claimants to the wealth, thats about what is needed to balance out. On the other hand: > If I was alive in 1922 and stashed away $8 million in cash it would only be worth about $140 million today. Why would it not be worth $8 million?

From peasants shoes to peasants shoes all in three generations, signore Medici.

> Why would it not be worth $8 million?

https://www.in2013dollars.com/us/inflation/1923

Re: Stock market charts you never saw (2021)

#20

Post by ilikehurdles »

recuter wrote: post #10

If I was alive in 1923 and stashed away $8 million in ̶c̶a̶s̶h̶ (Edit: 100y bonds) would only be worth about $140 million today. Had I put it into some fancy ETF (Recall Vanguard dates back only to 1975, but whatever) I'd be a billionaire. That's it, that is the entire difference of less than an order of magnitude. Don't reckon the nickels and the dimes matter much to centenarians. Most people don't even have $8000 t…

If you had $8million in 1923 cash stashed away, you’d have $8million in 2023 cash today. Ie you’d have lost about 94% of your buying power.
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