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Stock market charts you never saw (2021)

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Re: Stock market charts you never saw (2021)

#51

Post by Dylan16807 »

ceejayoz wrote: post #46
onlyrealcuzzo wrote: post #21

Earlier quoted context omitted.

> If I was alive in 1923 and stashed away $8 million in cash it would only be worth about $140 million today. Stashed it away as cash where? If you had $8M in 1923 and kept it under a mattress, it would still be $8M today - the difference is due to inflation - in 1923 you would've been the equivalent of a Billionaire today - and today... you'd have $8M. I think things like this matter a lot. If you invested in treasu…

> If you had $8M in 1923 and kept it under a mattress, it would still be $8M today Saving account interest rates haven't been 0% for the whole last 100 years. It's not a great investment, but you'd have substantially more than $8M.

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?

Re: Stock market charts you never saw (2021)

#52

Post by eatsyourtacos »

cmrdporcupine wrote: post #37
antisthenes wrote: post #24

The reason this kind of analysis is irrelevant is that human civilization has only been exploiting oil since ~ early 1900s. Sure, fossil fuels in the form of coal has been exploited before, but nothing on the scale of coal/gas/oil use that started after the Great Depression and ramped up to peak per capita consumption circa 1970s if memory serves. So you always have to look at that historic period discounting that, a…

Sure, but it begs the question what happens when fossil fuel exploitation inevitably is curtailed drastically; either early by necessity because of reasonable legislation, or a bit later because of a stronger ecological collapse or depletion. Solar, wind, or whatever Future Tech is unlikely to have the same direct mine->refine->commodity->sell->use cycle on which a lot of this edifice is built. This could be quite re…

>Wait until people's 401Ks start to explode

Maybe we shouldn't have moved to such a completely moronic system them which shifts all the risk to the individual and just "hope" they magically make money on something they have no control over.

It all works until it doesn't.

Re: Stock market charts you never saw (2021)

#53

Post by karatinversion »

ceejayoz wrote: post #46
onlyrealcuzzo wrote: post #21

Earlier quoted context omitted.

> If I was alive in 1923 and stashed away $8 million in cash it would only be worth about $140 million today. Stashed it away as cash where? If you had $8M in 1923 and kept it under a mattress, it would still be $8M today - the difference is due to inflation - in 1923 you would've been the equivalent of a Billionaire today - and today... you'd have $8M. I think things like this matter a lot. If you invested in treasu…

> If you had $8M in 1923 and kept it under a mattress, it would still be $8M today Saving account interest rates haven't been 0% for the whole last 100 years. It's not a great investment, but you'd have substantially more than $8M.

The parent specifically refers to holding it as cash (“under the mattress”), though. And of course, if you do put it in the bank 1923, there’s no deposit insurance for the first ten years, any possible bank might just go under in the first ten years…

Re: Stock market charts you never saw (2021)

#54

Post by jldugger »

quickthrowman wrote: post #17
jldugger wrote: post #13

Earlier quoted context omitted.

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.

Unfortunately we don't have such a thing. Especially in 1922, we didn't even have TIPS, or 100 year bonds. The best case scenario you're looking at something like 10 year treasuries at 4.3 percent[1] in 1922. Shorter durations will help match dramatic inflation moves things get weird in the great depression -- a bout of 10 percent deflation happened in 1933.

    [1]: https://www.multpl.com/10-year-treasury-rate/table/by-year

Re: Stock market charts you never saw (2021)

#55

Post by verteu »

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…

The article provides a counterpoint: If you invested in "the market" in 1851, you'd still be underwater (in real terms) in 1932.

See page 44.

Re: Stock market charts you never saw (2021)

#56

Post by ByersReason »

lkbm wrote: post #30
recuter wrote: post #19

Earlier quoted context omitted.

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

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

Re: Stock market charts you never saw (2021)

#57

Post by psychlops »

knodi123 wrote: post #40
jldugger wrote: post #13

Earlier quoted context omitted.

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?

> Why would it not be worth $8 million? mice ate some.

Meaning trust fund children.

Re: Stock market charts you never saw (2021)

#58

Post by ikiris »

onlyrealcuzzo wrote: post #21
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 I was alive in 1923 and stashed away $8 million in cash it would only be worth about $140 million today. Stashed it away as cash where? If you had $8M in 1923 and kept it under a mattress, it would still be $8M today - the difference is due to inflation - in 1923 you would've been the equivalent of a Billionaire today - and today... you'd have $8M. I think things like this matter a lot. If you invested in treasu…

If you only had a savings account with interest, you'd be lucky to have anything considering the great number of bank failures and lack of FDIC for a portion of that timeframe.

Re: Stock market charts you never saw (2021)

#59

Post by ikiris »

dot1x wrote: post #48
NovemberWhiskey wrote: post #29

Earlier quoted context omitted.

Why would you exclude part of the total return on an investment? It'd be like ignoring the principal value of a bond because you expect to live on the coupon. Cashflows are cashflows.

Because you'd be selling it as you earn it to be able to live on on retirement. In fact, dividends wouldn't even be enough.

but they still exist and can be a large fraction of the value...

Re: Stock market charts you never saw (2021)

#60

Post by Dylan16807 »

dot1x wrote: post #47
danuker wrote: post #28

Earlier quoted context omitted.

Dividends aren't enough to cover living expenses. If you plan to withdraw 4% per year, so you preserve your wealth indefinitely, you're more than 2 percentage points short when the dividend yield is 1.71% [1] If you want to live solely from dividends, you'll need more than double the capital. If you want to die with zero [2], it's impossible. I'd much rather invest in a dividend-accumulating index fund and sell as I…

Seems like you agree returns would be even worse since you'd take out more than the dividend to survive.

Once you start selling off your assets, the """returns""" are worse, but equally so no matter what you invested in. It's better to leave that math out of the situation and look at the returns of the actual assets by themselves. Which includes reinvesting.

If you really want to factor in the sell-off, then every dollar of dividend means one less dollar of sold stock. If dividends go higher than withdrawals for a year, then you need to buy more stock to compensate. So the math comes out the same. What you don't do is ignore dividends, or let excess dividends pile up in cash form. Which the original paper apparently did.

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