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Stock market charts you never saw (2021)

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Re: Stock market charts you never saw (2021)

#131

Post by roflyear »

onlyrealcuzzo wrote: post #66
Dylan16807 wrote: post #51

Earlier quoted context omitted.

How much more would you have with a savings account? Apparently the $140M number was bonds. Edit: Or, theoretical bonds that match inflation and don't actually exist?

In a non-funny-money-world, government bonds would yield more than expected inflation. No one would ever give the government money expecting to lose money. Only in a world where you can always count on the government to lower interest rates ad-infinitum to keep itself solvent which pushes up the value of your bonds to someone who's willing to pay more money to lose the same amount of money later (a greater fool - alt…

This isn't true.

If you had a bunch of gold, for example, you'd have to pay for security to... secure it.

People are willing to "pay a premium" to store money somewhere risk-free.

Re: Stock market charts you never saw (2021)

#132

Post by roflyear »

onlyrealcuzzo wrote: post #109
Dylan16807 wrote: post #76

Earlier quoted context omitted.

I don't follow your argument here. How about a hypothetical? Let's say government bonds pay 3%, they have done so for decades, and we're confident they will keep doing so for decades. So right off the bat, no lowering of interest rates ad-infinitum. Let's also say inflation is 4%. Everyone wants to beat inflation. But you need to find an investment opportunity for that. And the higher an investment yields, the riskie…

AAA corporate bond yield has always been about ~1% above the treasury yield [1]. Almost nobody has bought government bonds for a long time besides pension funds (due to obligations), banks (due to regulations), foreign governments (due to ForEx necessity), the Fed, and a pretty small amount (~8%) held in 401ks (overwhelmingly by older folks) [2]. Rich people certainly aren't buying Treasuries to protect their wealth…

This is just misinformation, I have worked with investment firms and family offices that regularly buy government securities.

Re: Stock market charts you never saw (2021)

#133

Post by roflyear »

tarboreus wrote: post #35
ilikehurdles wrote: post #20

Earlier quoted context omitted.

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.

Through most of that history, interest rates in savings accounts exceeded inflation, often significantly so. So I find this unconvincing. Obviously not a great investment comparatively, but the number in the account is going to be significantly higher.

Really? I can't easily find a chart going past 1980 for "savings rates" nevermind that these accounts often have a $ cap, and nevermind going back to 1920.

Re: Stock market charts you never saw (2021)

#134

Post by fshbbdssbbgdd »

lexapro wrote: post #94
coliveira wrote: post #72

Earlier quoted context omitted.

Removing dividend does make sense because dividends are taxed. You cannot reinvest all dividends, unless you're using a tax advantaged account.

Price increases are taxed as well (eventually), do you also remove them?

Stepped-up basis takes care of that. Buy, borrow, die!

Re: Stock market charts you never saw (2021)

#135

Post by roflyear »

ByersReason wrote: post #56
lkbm wrote: post #30

Earlier quoted context omitted.

You've got it backwards. In 1923, your 8 million 1923-dollars was worth what $138 million 2023-dollars is today. You started with $138 million 2023-dollars, but denominated in 1923-dollars that's $8 million. If you just hold on to it your 1923-dollars have become 2023-dollars, but there's still exactly $8 million of them. You've lost nearly 95% of the value.

however, given that your 1923 dollars were likely silver dollars which currently trade for $32 (for junk grade) and up ... I made that 8m * 32 = 256m :) - and better if you were sensible and stored un-circulated dollars

Well, you'd have to have a safe place to literally store that cash. If that save place was a bank, then you'd not have silver dollars, unless you paid for storage.

Also banks weren't really safe that entire time!

Re: Stock market charts you never saw (2021)

#136

Post by ghaff »

pjc50 wrote: post #115
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…

> since 1928 dividends plus inflation accounted for 99.7% of the nominal wealth produced, as of 2008, by investing in stocks. OK, so strip out inflation to get real rather than nominal returns, and it becomes "stock investment produces almost all its returns in dividends over a long period". Which is .. not that surprising? Because dividends are ultimately why people buy stocks in the first place? The present value o…

I think it probably would surprise a lot of people. But you're absolutely right that the Finance 101 argument for how a stock should be valued is the net present value of its dividend stream. Largely fail at the individual firm level of course for various reasons (and is a naive estimate for those many reasons) but it shouldn't be too surprising that it works in aggregate.

Re: Stock market charts you never saw (2021)

#137

Post by autokad »

pjc50 wrote: post #115
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…

> since 1928 dividends plus inflation accounted for 99.7% of the nominal wealth produced, as of 2008, by investing in stocks. OK, so strip out inflation to get real rather than nominal returns, and it becomes "stock investment produces almost all its returns in dividends over a long period". Which is .. not that surprising? Because dividends are ultimately why people buy stocks in the first place? The present value o…

> Because dividends are ultimately why people buy stocks in the first place?

I would disagree, I feel like the mojority of stonk owners think dividends are passe companies, and a real company would reinvest its earnings or buy back stock. I disagree with these people. I think a company that has no intention of paying a dividend is merely an over produced digital collectible.

Re: Stock market charts you never saw (2021)

#138

Post by kortilla »

treis wrote: post #111
sleton38234234 wrote: post #92

I have a theory. The last 100 years has seen govt spending as percent of gdp increase to ever greater levels. People are expecting more and more handouts and no one wants to pay for it. Without the ability to pay for it via taxes, the govt will eventually have to default on it's currency and thus real returns on fixed income/bonds will have to become increasingly negative. Their article already shows a slight widenin…

>People are expecting more and more handouts and no one wants to pay for it I think this is more that we're entering a post material scarcity economy kind of like we changed from almost everyone being farmers. We're leaving behind the economy where almost everyone manufactures stuff to where they do something else.

> think this is more that we're entering a post material scarcity economy

No we’re not. Materials for housing, etc are just as expensive as ever. Food still has to be heavily subsidized by the government directly and indirectly (“water rights”).

Post-scarcity is a fantasy world used to justify heavily socialist policies that allow people to not work without having to wonder who does have to work.

Re: Stock market charts you never saw (2021)

#139

Post by autokad »

mooreds wrote: post #32

You'll want to download the PDF and then scroll to page 43 to see the charts. The previous pages are about methodology, I think, I scrolled past them to see the pretty pictures. Interesting look at truly long term results from the US stock market and bond market. Back ot the 1850s. Also looks at when stocks and bonds lagged "the average" or performed poorly for decades. I guess my question is: where else are you goin…

two trends have me highly concerned: 1) the baby boomers are now starting to retire in large numbers and they will go from investing and lending to consuming, selling stocks, etc. 2) population decline is a thing. many countries have already started the downward trend, and most of the world will be declining by 2050.

this puts a huge ? on all asset classes.

Some other points about stocks, their 10% returns was done by many studies that looked at performance between 1952 and 1999 (just after the great depression ended and just before the dotcom bust).

almost all asset classes over that 20 year period (1999-2019) out performed stocks, including gold and oil.

Re: Stock market charts you never saw (2021)

#140

Post by daze42 »

xyzzy123 wrote: post #104
smaddox wrote: post #98

Earlier quoted context omitted.

Private debt dwarfed public debt until very recently, and it's still significany higher: https://braveneweurope.com/steve-keen-what-is-the-role-of-pu... Also GDP is a terrible proxy for economic prosperity. A broken window adds to GDP, but subtracts from prosperity. If we had a better proxy for prosperity, it would be easier to see if government debt was actually net negative or net positive effect. As is, all argume…

I think prosperity (particularly if we include health, education, wellbeing etc) is unfortunately very difficult to measure and any attempt necessarily incorporates a lot of speculation and ideology. A forest cleared creates wealth & prosperity, but what was the value of the forest that was lost? What value do we put on natural amenity, biodiversity, a pristine environment? An employee works very long hours, numbers…

This seems to be the root of most, if not all, economic disagreements. It's just so hard to objectively measure these things.
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