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Stock market charts you never saw (2021)

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Re: Stock market charts you never saw (2021)

#91

Post by kgwgk »

verteu wrote: post #55
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.

A counterpoint to what?

What's your definition of "underwater (in real terms)"? That investment would have been paying dividends for decades. What happens with those cash flows?

Re: Stock market charts you never saw (2021)

#92

Post by sleton38234234 »

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 widening between bonds/equities post 1950. My theorey is that for the next 100 years, we'll see a much larger widening between the returns of bonds and equities as more and more governments default on their currency. Thoughts?

EDIT: the article I referenced was the one the other poster mentioned: https://economics.harvard.edu/files/economics/files/ms28533....

Also, equity returns should in the long term be equal to Producivity per capita + population growth + inflation + dividends. And If you look at each of those for the last 100 years and the next 100 years for the US, you'll see a pattern. Pop growth down to 0.4 from 1.3. Per capita growth down several percent in the last 20 years vs the 100 years before that and with current PEs where they are, dividends are down to 1.3% from a historical 4.5%. Translation: Future equity returns will be much much closer to inflation than they have been in the past.

Re: Stock market charts you never saw (2021)

#93

Post by nostromo »

not_math wrote: post #88
nostromo wrote: post #78

The Titanic was built a bit over 100 years ago for 1.5m pounds -- today that'd buy you a nice London two-bedroom apartment. I wonder if in 100 years from now, people will casually be talking about their nice (but modest) London two-bedroom apartment they bought for 100m pounds.

The Titanic cost $7.5 million to build, which is $200 million in today's money (as of 2020) [1]. I'm pretty confident this is not the cost of the average flat in London. [1] https://www.history.com/news/titanic-facts-construction-pass...

The price was 1.5m pounds, as the ship was not built in the US. https://en.wikipedia.org/wiki/Titanic

Re: Stock market charts you never saw (2021)

#94

Post by lexapro »

coliveira wrote: post #72
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…

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?

Re: Stock market charts you never saw (2021)

#95

Post by dougSF70 »

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…

> Put another way, since 1928 dividends plus inflation accounted for 99.7% of the nominal wealth produced, as of 2008, by investing in stocks.

This would imply that the average investor will generate wealth by investing in equities that pay dividends...in other words profitable companies...

Re: Stock market charts you never saw (2021)

#96

Post by worik »

For modern computing/finance type of people (I was but now have reformed) the lack of financial data is a problem. Even if you can get access to every trade, which is hard, the amount of data is not what modern machine learning types require.

Thr EMH is a hard mistress too. There is no amount of data that can help you solve unsolvable equations.

So alot fall into this trap, synthetic data. Some of the best statisticians on the planet have. It is so tempting to believe that there is money to be made by being cleaver trader I markets.

General, there is not. Buy and hold is not a shibolith it is a strategy. It is the only strategy that can be replicated.

Synthesizing data to disprove buy and hold is wishful thinking. Data snooping.

Re: Stock market charts you never saw (2021)

#97

Post by netrus »

not_math wrote: post #88
nostromo wrote: post #78

The Titanic was built a bit over 100 years ago for 1.5m pounds -- today that'd buy you a nice London two-bedroom apartment. I wonder if in 100 years from now, people will casually be talking about their nice (but modest) London two-bedroom apartment they bought for 100m pounds.

The Titanic cost $7.5 million to build, which is $200 million in today's money (as of 2020) [1]. I'm pretty confident this is not the cost of the average flat in London. [1] https://www.history.com/news/titanic-facts-construction-pass...

Pretty sure the Titanic was paid in GBP -- the 1.5M GBP number is correct, the exchange rate was bit different back than.

https://steemit.com/money/@lixtiklipbalm/exchange-rate-of-br...

Re: Stock market charts you never saw (2021)

#98

Post by smaddox »

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…

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 arguments one way or the other are speculation and ideology.

Re: Stock market charts you never saw (2021)

#99

Post by verteu »

kgwgk wrote: post #91
verteu wrote: post #55

Earlier quoted context omitted.

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.

A counterpoint to what? What's your definition of "underwater (in real terms)"? That investment would have been paying dividends for decades. What happens with those cash flows?

It was a counterpoint to the common wisdom that "stock returns beat inflation over long-term periods." But I didn't realize the author discarded dividends -- that makes the entire analysis suspect.

Re: Stock market charts you never saw (2021)

#100

Post by zie »

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…

The other option is they raise taxes, cut spending and they actually pay those debts off.

All debt comes due eventually, you can choose to go bankrupt or you can choose to pay it.

But if neither option happens in your lifetime, you don't need to care, if you are just trying to optimize for yourself.

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