Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Investing Returns on the S&P500

github.com

Post reply on HN
Print view View original

201–210 of 357 posts

Re: Investing Returns on the S&P500

#201

Post by the_watcher »

Redoubts wrote: post #142
JackFr wrote: post #23

Earlier quoted context omitted.

> USA is superpower at the peak. That remains to be seen > Argentina used to be richest country in the world. That is not true. In the early 20th century they were top 10, but never surpassed Britain or the US in GDP per capita.

> That remains to be seen What would a more powerful USA look like? It doesn't appear that the country is after an empire the same way the British had one 100 years ago, so raw aggression is out. I can't imagine a realistic scenario that doesn't require the implosion of other nations to embiggen America.

> I can't imagine a realistic scenario that doesn't require the implosion of other nations to embiggen America.

This has happened! In the past 30 years, no less.

Re: Investing Returns on the S&P500

#202

Post by squeaky-clean »

loeg wrote: post #175
dap wrote: post #153

The NYTimes has a great visualization of S&P 500 returns for money invested any year between 1920 and 2009 and withdrawn between 1921 and 2010: http://www.nytimes.com/interactive/2011/01/02/business/20110...

I saw that visualization back in 2011 and I think it's actually a pretty poor one. It uses shades of red for what are objectively not bad outcomes (return greater than inflation is red, real return between 3 and 7% is pink). IMO that's misleading. It would be helpful if it compared against the same visualization for other straightforward market investments, like bonds, or savings accounts / CDs. Those asset classes w…

> It uses shades of red for what are objectively not bad outcomes (return greater than inflation is red, real return between 3 and 7% is pink). IMO that's misleading.

Not sure if I'm reading it wrong, but the key shows <=0% as red, 0-3% as pink, 3-7% as biege.

Re: Investing Returns on the S&P500

#203

Post by edpichler »

I am a holder and, as a small stock market investor, this study is gold to me. As a holder, the worst years are the first decade, after that, the interests become explosives.

The difficulty to be a holder is to spend less on the present to get return in a future. Human being is definitely not good on this.

Re: Investing Returns on the S&P500

#204

Post by ced »

jonknee wrote: post #149
SilasX wrote: post #123

Earlier quoted context omitted.

And then that index fund has to take the loss that comes with having bought a stock that failed and sell at a loss, while not capturing the gains of stocks that got big enough to make it on the index. Shouldn't the index "return" thus diverge from the return of an actual index fund in practice given enough years?

That's not how it works, the return of the index is the actual return of the included stocks while they are in the index . There will be winners and losers, but the return is actually what you get.

I'd appreciate if you could expand on that, because I share the same concern as GP. It seems to me that the index fund has to sell a lousy company at a low price (since it's being delisted) and buy a strong one that's being included in the index. Whereas the index, being just a number, can magically perform the swap without taking a hit.

Re: Investing Returns on the S&P500

#205

Post by nostrademons »

jpeg_hero wrote: post #195
nostrademons wrote: post #138

Earlier quoted context omitted.

Many information-age business models (SaaS, marketplaces, advertising & other grow-first-then-monetize consumer businesses) are even more dependent upon capital than their industrial-age predecessors, since they run at a loss until they completely saturate a market and then turn on the money spigot. They've just been going to the private markets rather than the public markets because the Information Age started with…

thats some of problem. once they are a money spigot they don't need the capital market. when they are money burning they are too risky for what we consider acceptable for a stock listing (though biotech seems to be an exception for some odd reason) there are no 'safe' way to deploy capital that returns 6%

But that's always been the nature of capital - there are no returns without risk. Capital's always been a bet on the uncertain future - the whole reason we have the concept of a modern corporation is so that risk can be spread across lots of people who can afford to lose the money they put up.

The percentage of investors who lost their shirt in the Industrial Revolution dwarfs those who lost their shirt in the dot-com boom. It's just that everybody who went broke investing in a refinery or mining scheme that was just snake oil dropped out of the history books, and we only hear about the people who got fabulous wealthy.

Re: Investing Returns on the S&P500

#206

Post by ryangittins »

darawk wrote: post #177
JackFr wrote: post #23

Earlier quoted context omitted.

> USA is superpower at the peak. That remains to be seen > Argentina used to be richest country in the world. That is not true. In the early 20th century they were top 10, but never surpassed Britain or the US in GDP per capita.

> That remains to be seen The fact that it remains to be seen is kind of the point. It is possible that it is at peak, and if it is true, then it is likely that historical data is not very useful in understanding market returns.

Couldn't you have made this same point at most times in modern American history? Wasn't it possible that the US was at its peak in 1970? Or 1980? Or 1990? I suspect it is only due to hindsight that we know it wasn't the peak then.

Re: Investing Returns on the S&P500

#207

Post by ricardobeat »

dap wrote: post #153

The NYTimes has a great visualization of S&P 500 returns for money invested any year between 1920 and 2009 and withdrawn between 1921 and 2010: http://www.nytimes.com/interactive/2011/01/02/business/20110...

Yay, another viz perfect for the colorblind :D

Re: Investing Returns on the S&P500

#208

Post by Retric »

jlebar wrote: post #190
Retric wrote: post #27

Earlier quoted context omitted.

While inflation was adjusted for it was not accurately adjusted for as it ignored taxes. If your returns are 10% and inflation is 10% you get taxed on that 10% and lose money. PS: Now if this is for 401k accounts or something that's another story.

This is misleading. The question is, what is a better strategy? Like, you lose real value after this scenario, but you would have lost more if you'd have kept the money under your mattress. The only relevant question is: compared to other strategies , do you come out ahead?

I think the default option is usually to spend the money now.

If your choices are go on a 'cruse' today, or invest your money wait 15 years and then pay for a cruse waiting seems pointless. If you wait 15 years and can't pay for a cruse your clearly worse off. If you wait 15 years and can pay for a cruse and have money left over then that's an advantage to investing.

Sure, you can consider several investment strategy's. But, you can't see the future when your deciding what to do today. So, you can't say ahead of time what the best strategy is.

Re: Investing Returns on the S&P500

#209

Post by rando18423 »

Evolved wrote: post #192
rando18423 wrote: post #183

Lots of talk in here concerning superpowers falling, and not much about how it's way more favorable for companies to use debt financing in a low interest rate environment... Lol developers should stick to developing

Who do you think created HFT (High Frequency Trading) systems? Surely bankers stick to banking but hire developers to give them that competitive edge. The odds are that software engineers would have come up with the idea of and implementation of, a working high frequency trading system before bankers would have despite banking probably not being a software engineer's specialty.

I think market makers used technology to do exactly what they've always done at increasingly higher speeds. History also shows you're wrong, for hundreds of years market makers have sought an edge by trying to get information faster and faster. Hell, it used to be carrier pigeons that gave them the edge. There's really not much new here...

Re: Investing Returns on the S&P500

#210

Post by Steuard »

acdanger wrote: post #79
Steuard wrote: post #65

Earlier quoted context omitted.

Ignorant question: Why ETFs rather than the equivalent mutual funds (which I think are usually available)? I have some sense of the differences, but I've never taken the time to figure out the pros and cons. (I've been investing mostly in index funds for the past 15 years or so; ETFs weren't really on my radar when I started.)

ETFs are generally cheaper to own in terms of their expense ratios, something like <=1% vs 1% – 3% for mutual finds. It‘s easier to get into and out of ETFs; They trade all day just as a stock does. Mutual funds you enter into at the market‘s close at a price set at that time. Also, ETFs are bit more transparent as to their capital gains taxes costs. Less surprises when you liquidate.

Yikes! Are there really index funds with 1% expense ratios? I think my Vanguard funds are all under 0.2%, some way under. (I've got the impression that Vanguard's ETF expense ratios are similar or identical to the corresponding fund expense ratios.)

Thanks for the overview. I'd heard about the constant trading difference before (I've tended not to think about it, since I'm a buy-and-hold-for-years type). Do you have a sense of how much cost winds up being associated with broker commissions and/or the buy-ask spread? I hadn't been aware of the simpler capital gains situation (thus far, I've just blindly copied down whatever's summarized on the year-end tax statement they provide onto my IRS forms).

Post reply on HN