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Stock Market Returns Are Anything but Average

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Re: Stock Market Returns Are Anything but Average

#81

Post by nocommentguy »

staticman2 wrote: post #73
nocommentguy wrote: post #48

Earlier quoted context omitted.

If you’re not being hurt by the fire alarm, maybe you should stop spreading conspiracy theories about there being a fire?

I wouldn't call some random person howling at the moon a fire alarm. Never mind that online people have been predicting super inflation since at least 2009. I remember a Youtuber in 2009 that knew economics more than President Obama's advisors because Duck Tales did an episode on inflation. But I guess by defining inflation as "stocks going up" the Duck Tales expert could have made it categorically impossible to be p…

Ok you’ve convinced me, I’m going to consume products instead of holding capital assets /s

Take a look at ag futures my dude.

Re: Stock Market Returns Are Anything but Average

#82

Post by grumpwagon »

tut-urut-utut wrote: post #32
ahelwer wrote: post #6

There are all sorts of interesting facts you can pull out of this, like how if you missed the top 10 best days in the market from 1999-2019, your return was cut in half. If you missed the top 20 best days, you actually lost money: https://www.fool.com/investing/2019/04/11/what-happens-when-... Basically never mistake annualized return over a long period of time for your expected return in a given year (or day, etc).…

And if you avoided the worst 10 days, your earnings double. If you avoided 20 worst days, your earning doubled again. What is the point of such trivia? That most of the profit or loss happens during the days of high volatility?

The point of the trivia is arguing against trying to time the market. Lots of people predict crashes are coming, so shift money from equities to cash or bonds. Unless you can time it perfectly (you can't), it is better to hold because you don't know when the best or worst days are.

Re: Stock Market Returns Are Anything but Average

#83

Post by CarelessExpert »

muskox2 wrote: post #21
staticman2 wrote: post #12

Earlier quoted context omitted.

Except measuring the value of money as something other than the ability to provide consumption (the ability to buy things you consume, rather than investments) doesn't make sense, regardless of how fashionable it is on this site to throw around the term "asset inflation".

What is your explanation for the explosion in asset prices over the last year, if not inflation? Do you think the assets have become fundamentally more valuable?

> What is your explanation for the explosion in asset prices over the last year, if not inflation?

Well, a few ideas immediately spring to mind:

a) Historically low interest rates are causing people to chase gains elsewhere. Again, people end up looking to the markets. This has been an ongoing trend exacerbated by...

b) For folks not on the margins, discretionary spending was severely curtailed last year. They had to do something with that extra cash. Many people, during a time of tumult, chose to save. This is only exacerbated a trend that started way back in 2008 due to similar post-disaster psychological scarring. Where did people put the money? Into the markets.

c) Wealth concentration means a huge amount of the cash floating around has landed in the coffers of the largest institutions and individuals. Those institutions aren't using that cash to buy chips at the 7/11. They're either i) saving it, which means putting it into the market, or ii) using it to buy up assets (e.g. acquisitions) which itself bids up prices.

In short: What's going on the market probably has absolutely nothing to do with what's going on on mainstreet.

Of course, that's been true for the last 10 years as folks on the fringes continued to predict hyperinflation post-2008. But, the great thing about disaster predictions is you can always just move the goalposts out...

Re: Stock Market Returns Are Anything but Average

#84

Post by boringg »

I'm going to add that I did a rudimentary an analysis of the S&P 500 because everyone seems to be throwing their money into passive S&P500 low vehicle investments. I looked at every hold period since inception from 1 year holds / returns up to 40 year hold and returns.

Timing is crucial for good returns - depending on when you put in and take out your money the returns can be negative (even in cases where you hold up to 15 years) and in other cases quite good (best cases inflation adjusted annualized returns of 12% over 40 years).

I did it because I didn't buy the commentary that you should just put it in S&P 500 and that it will almost guarantee returns.

Re: Stock Market Returns Are Anything but Average

#85

Post by ycombinete »

xur17 wrote: post #35
ycombinete wrote: post #3

Earlier quoted context omitted.

I’ve made 15% on an 80/20 VWRA/IGLA split since September 2020. It scares me. It feels like too much. Like it’s going to pop.

I might agree that general stock market prices are quite high, but arguing that "they went up 15% in 6 months" doesn't seem particularly strong. That has occurred historically, and doesn't automatically mean it's overpriced.

I’m quite new to it, so that’s reassuring to hear. September was when I made my first purchase.

Re: Stock Market Returns Are Anything but Average

#86

Post by bryanlarsen »

ricardobeat wrote: post #79
willcipriano wrote: post #46

Earlier quoted context omitted.

> But what the hell else am I going to do? Personally I'm taking some money that could go into the stock market and investing in increasing the energy efficiency of my home to reduce my future costs, buying items I'll need in bulk (things like 200 pairs of socks so I'm set for life) and other things that will improve my QOL without ongoing costs.

How can I start investing in the sock market?

I'm going to take your awesome joke seriously. You can invest in the "consumer staples" index which is relatively counter-cyclical. People buy a similar number of socks every year whether they're doing well or badly.

Re: Stock Market Returns Are Anything but Average

#87

Post by boringg »

ahelwer wrote: post #6

There are all sorts of interesting facts you can pull out of this, like how if you missed the top 10 best days in the market from 1999-2019, your return was cut in half. If you missed the top 20 best days, you actually lost money: https://www.fool.com/investing/2019/04/11/what-happens-when-... Basically never mistake annualized return over a long period of time for your expected return in a given year (or day, etc).…

I think the way you should think about the stock market is similar to beating the Casino in blackjack & card counting. When you know the deck is rich ins face cards make more aggressive bets, when its low in face cards be frugal. I.e. don't put lots of money into the market when its hot & put more money in when its cold. That way you statistically have a better chance on getting a good return.

Re: Stock Market Returns Are Anything but Average

#88

Post by CarelessExpert »

boringg wrote: post #84

I'm going to add that I did a rudimentary an analysis of the S&P 500 because everyone seems to be throwing their money into passive S&P500 low vehicle investments. I looked at every hold period since inception from 1 year holds / returns up to 40 year hold and returns. Timing is crucial for good returns - depending on when you put in and take out your money the returns can be negative (even in cases where you hold up…

> depending on when you put in and take out your money the returns can be negative (even in cases where you hold up to 15 years)

Sorry, but unless you're talking about truly black swan circumstances like the Great Depression or the 2008 crash, I don't believe for a second that, over a 15 year timespan, holding the S&P will result in negative returns frequently enough that a typical investor has to concern themselves with market timing.

You need to prove your work for a statement that strong.

Re: Stock Market Returns Are Anything but Average

#89

Post by Nasrudith »

berkes wrote: post #27
Someone1234 wrote: post #8

Earlier quoted context omitted.

It starts to when you ask yourself: Where else are people meant to store money? Since interest rates and bond rates were at historical lows. So you have people who are looking at 10% YOY returns on one hand and 0.2%/2% on the other and making the rational decision. Does this make stocks overinflated? Yes. Is it going to suddenly pop? Unlikely, since the conditions that caused it won't suddenly change (e.g. certain bo…

> Is it going to suddenly pop? Unlikely.. This is not financial advise, but an investor myself, I'm on the other end of the spectrum. "Is it going to suddenly pop? Certainly! We just don't know when, how much and for how long. It could be june 2021, it could be 10 years after the Great Sino-Russian war of 2038".

That isn't sudden in the usual meaning. What is meant by the question "Are you going to suddenly die?"? If a safe falls on you death will be sudden but there isn't any reason to believe you will be around falling safes historically. You may have some hidden defect. Sure you will die eventually even if you were unaging, but what is usually meant is "Do you have any known fragility like say a weak heart, high risk of stroke, or a habit of using something volatile in dosage like speedballs or carfentanil? "

Re: Stock Market Returns Are Anything but Average

#90

Post by arez »

boringg wrote: post #84

I'm going to add that I did a rudimentary an analysis of the S&P 500 because everyone seems to be throwing their money into passive S&P500 low vehicle investments. I looked at every hold period since inception from 1 year holds / returns up to 40 year hold and returns. Timing is crucial for good returns - depending on when you put in and take out your money the returns can be negative (even in cases where you hold up…

the problem is just that you don't know when it's a good or bad timing, that's why you shouldn't bother and just put your money in. If your money is long enough in the market it doesn't matter anymore that much as it averages out. It also sounds that you think 15yrs is a long time, but for ETF you should consider more like 20yrs and up
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