5 ms·

So what alternative method do you propose for predicting growth (or decline) over the next century?

jakozaur 10y ago
I don't have a crystal ball. However, it would be more useful if more stock indexes would be considered than just one S&P 500. E.g. Dow Jones: http://www.macrotrends.net/1319/dow-jones-100-year-historical-chart http://www.macrotrends.net/1319/dow-jones-100-year-historica... Also from other nations.
- encoderer 10y ago
  Nobody uses the dow. It's price-weighted. It's most famous for being reported at the 6PM local news. But seeing the Russell 2000 would be great.
- Mane 10y ago
  Dow Jones is probably one of the least interesting ones due to the small number of stocks in it.
  - blastrat 10y ago
    it's not even the small number that makes it useless, it's the fact that it is not weighted by market cap.
georgeecollins 10y ago
100 years ago you would have probably mostly invested in the UK, French, German and Russian stock market as well as the US. So if you want to predict the next 100 years I would try to combine the performance of the UK and the US, on the assumption that US is going to behave economically like an existing power rather than an up and coming power. Also, just as some risky "foreign" markets did awesome a hundred years ago-- that's what the US was to the investing world in 1900, and it did great-- some will do great over the next 100 years. Some will have wipe outs as Russia, Germany and Argentina did. The future is hard to know. Really though, owning some vanguard funds is a good idea. I'd just hold on to a little real estate as well.
- mark_edward 10y ago
  You would've bought Russian stock in 1916?
  - Rexxar 10y ago
    Not in 1916 but why not in 1890 ?
    - vkou 10y ago
      Because the country just got over serfdom, corruption was rampant, and its imperial ambitions were too big for its boots?
  - strictnein 10y ago
    Or the UK, France, and Germany during WW1. Seems suboptimal.
  - SilasX 10y ago
    If one took the long-term "buy and hold" strategy, there would be no reason not to include Russia in your portfolio, in proportion to its relative market cap. Of course, "buy and hold" would have been very wrong in that era (two of your superpowers would permanently tank), as it might be in this one.
specialist 10y ago
Demographics. Africa, Nigeria in particular, looks like China and India of decades past.
- aorth 10y ago
  Perhaps, but Nigeria is a disaster waiting to happen. Their economy is dangerously dependent on crude petroleum exports[0] (second only to Saudi Arabia, I guess). This, along with them having destroyed 95% of their forests[1] in the last few decades, and having an expected population growth from 180→400+ million by 2040, is absolutely unsustainable and will be depressing to watch unfold. [0] http://atlas.media.mit.edu/en/profile/country/nga/ http://atlas.media.mit.edu/en/profile/country/nga/ [1] http://www.focusonforests.org/fcontent/nigeria.htm http://www.focusonforests.org/fcontent/nigeria.htm
  - specialist 10y ago
    Late response. I have to reply. Yes. China and India (and Pakistan and Brazil and...) are disasters in progress. Yet there are encouraging signs. I choose to hope that Nigeria and others will improve their lots as they climb the economic ladder. Their people certainly deserve it.
paganel 10y ago
A crystal ball. Seriously now, this is like asking: What methods do you propose for building a perpetuum mobile? This Universe does not allow for the future to be predicted, like it doesn't allow for the laws of TD to be broken. All the predictions of growth/decline you read/hear from people are just educated guesses, nothing else. Some of them might get lucky with their predictions, some of them might not, but let's not foul ourselves into thinking that we can predict the future only because we can make nice-looking charts about what happened in the past
- mac01021 10y ago
  This is a strange reply. You're saying we can't understand the world through science? Physical laws like the laws of thermodynamics are methods for predicting the future that we obtain by inferring them from what we've observed in the past. You can argue that particular domains (like the global economy) are nearly impossible to predict with much accuracy because we are unable to observe many of the driving variables and the underlying causal structure is too complicated for us to comprehend the laws of the system's behavior. But to say that, in general, the universe does not allow forecasting the future seems really weird.
  - paganel 10y ago
    > You're saying we can't understand the world through science? We're having a hard enough time as it is understanding the physical, inanimate world, when it comes to applying "science" to human endeavors the results are much less certain, approaching crystal-ball-reasoning. People did try in the past to do just that, i.e. to make scientific "sense" about what happened in the past with us, humans, with the hidden aim of trying to predict what will happen in the future. Karl Popper had a really good book explaining why that was a terrible idea (https://en.wikipedia.org/wiki/The_Poverty_of_Historicism https://en.wikipedia.org/wiki/The_Poverty_of_Historicism): > The book is a treatise on scientific method in the social sciences.[2] Popper defines historicism as: “an approach to the social sciences which assumes that historical prediction is their principal aim…”.[3] “The belief… that it is the task of the social sciences to lay bare the law of evolution of society in order to foretell its future… might be described as the central Historicist doctrine.”.[4] > Popper’s criticisms of the poverty of the idea of historical prediction can broadly be split into three areas: fundamental problems with the idea itself, common inconsistencies in the arguments of historicists, and the negative practical effects of implementing Historicist ideas. > iii) Individual human action or reaction can never be predicted with certainty, therefore neither can the future: “the human factor is the ultimately uncertain and wayward element in social life and in all social institutions. Indeed this is the element which ultimately cannot be completely controlled by institutions (as Spinoza first saw); for every attempt at controlling it completely must lead to tyranny; which means, to the omnipotence of the human factor – the whims of a few men, or even one.”. And, to put it more generally, we do know that the Sun will probably die in the next 4-5 billion years, that is science based on induction, i.e. we saw that other stars similar to the Sun have lived that long in the past and so we expect the Sun to have the same lifespan. But this is not prediction nor forecasting the future, is really a very good guess. Science itself is a really nice and educated guess. The problem is that we're much better at guessing what will happen to the Sun, let's say, compared to what will happen to the stock exchange in the next 10 years or to who the president of Rwanda will be in 15 to 20 years. David Hume has put down in writing the issue with induction better than a guy like me could ever do. From here (https://en.wikipedia.org/wiki/Problem_of_induction#David_Hume https://en.wikipedia.org/wiki/Problem_of_induction#David_Hum...): > Only through previous observation can it be predicted, inductively, what will actually happen with the balls. In general, it is not necessary that causal relation in the future resemble causal relations in the past, as it is always conceivable otherwise

I don't have a crystal ball. However, it would be more useful if more stock indexes would be considered than just one S&P 500. E.g. Dow Jones: http://www.macrotrends.net/1319/dow-jones-100-year-historical-chart http://www.macrotrends.net/1319/dow-jones-100-year-historica... Also from other nations.

encoderer 10y ago
Nobody uses the dow. It's price-weighted. It's most famous for being reported at the 6PM local news. But seeing the Russell 2000 would be great.
Mane 10y ago
Dow Jones is probably one of the least interesting ones due to the small number of stocks in it.
- blastrat 10y ago
  it's not even the small number that makes it useless, it's the fact that it is not weighted by market cap.

georgeecollins 10y ago

100 years ago you would have probably mostly invested in the UK, French, German and Russian stock market as well as the US. So if you want to predict the next 100 years I would try to combine the performance of the UK and the US, on the assumption that US is going to behave economically like an existing power rather than an up and coming power. Also, just as some risky "foreign" markets did awesome a hundred years ago-- that's what the US was to the investing world in 1900, and it did great-- some will do great over the next 100 years. Some will have wipe outs as Russia, Germany and Argentina did. The future is hard to know. Really though, owning some vanguard funds is a good idea. I'd just hold on to a little real estate as well.

mark_edward 10y ago
You would've bought Russian stock in 1916?
- Rexxar 10y ago
  Not in 1916 but why not in 1890 ?
  - vkou 10y ago
    Because the country just got over serfdom, corruption was rampant, and its imperial ambitions were too big for its boots?
- strictnein 10y ago
  Or the UK, France, and Germany during WW1. Seems suboptimal.
- SilasX 10y ago
  If one took the long-term "buy and hold" strategy, there would be no reason not to include Russia in your portfolio, in proportion to its relative market cap. Of course, "buy and hold" would have been very wrong in that era (two of your superpowers would permanently tank), as it might be in this one.

specialist 10y ago

Demographics. Africa, Nigeria in particular, looks like China and India of decades past.

aorth 10y ago
Perhaps, but Nigeria is a disaster waiting to happen. Their economy is dangerously dependent on crude petroleum exports[0] (second only to Saudi Arabia, I guess). This, along with them having destroyed 95% of their forests[1] in the last few decades, and having an expected population growth from 180→400+ million by 2040, is absolutely unsustainable and will be depressing to watch unfold. [0] http://atlas.media.mit.edu/en/profile/country/nga/ http://atlas.media.mit.edu/en/profile/country/nga/ [1] http://www.focusonforests.org/fcontent/nigeria.htm http://www.focusonforests.org/fcontent/nigeria.htm
- specialist 10y ago
  Late response. I have to reply. Yes. China and India (and Pakistan and Brazil and...) are disasters in progress. Yet there are encouraging signs. I choose to hope that Nigeria and others will improve their lots as they climb the economic ladder. Their people certainly deserve it.

paganel 10y ago

A crystal ball. Seriously now, this is like asking: What methods do you propose for building a perpetuum mobile? This Universe does not allow for the future to be predicted, like it doesn't allow for the laws of TD to be broken. All the predictions of growth/decline you read/hear from people are just educated guesses, nothing else. Some of them might get lucky with their predictions, some of them might not, but let's not foul ourselves into thinking that we can predict the future only because we can make nice-looking charts about what happened in the past

mac01021 10y ago
This is a strange reply. You're saying we can't understand the world through science? Physical laws like the laws of thermodynamics are methods for predicting the future that we obtain by inferring them from what we've observed in the past. You can argue that particular domains (like the global economy) are nearly impossible to predict with much accuracy because we are unable to observe many of the driving variables and the underlying causal structure is too complicated for us to comprehend the laws of the system's behavior. But to say that, in general, the universe does not allow forecasting the future seems really weird.
- paganel 10y ago
  > You're saying we can't understand the world through science? We're having a hard enough time as it is understanding the physical, inanimate world, when it comes to applying "science" to human endeavors the results are much less certain, approaching crystal-ball-reasoning. People did try in the past to do just that, i.e. to make scientific "sense" about what happened in the past with us, humans, with the hidden aim of trying to predict what will happen in the future. Karl Popper had a really good book explaining why that was a terrible idea (https://en.wikipedia.org/wiki/The_Poverty_of_Historicism https://en.wikipedia.org/wiki/The_Poverty_of_Historicism): > The book is a treatise on scientific method in the social sciences.[2] Popper defines historicism as: “an approach to the social sciences which assumes that historical prediction is their principal aim…”.[3] “The belief… that it is the task of the social sciences to lay bare the law of evolution of society in order to foretell its future… might be described as the central Historicist doctrine.”.[4] > Popper’s criticisms of the poverty of the idea of historical prediction can broadly be split into three areas: fundamental problems with the idea itself, common inconsistencies in the arguments of historicists, and the negative practical effects of implementing Historicist ideas. > iii) Individual human action or reaction can never be predicted with certainty, therefore neither can the future: “the human factor is the ultimately uncertain and wayward element in social life and in all social institutions. Indeed this is the element which ultimately cannot be completely controlled by institutions (as Spinoza first saw); for every attempt at controlling it completely must lead to tyranny; which means, to the omnipotence of the human factor – the whims of a few men, or even one.”. And, to put it more generally, we do know that the Sun will probably die in the next 4-5 billion years, that is science based on induction, i.e. we saw that other stars similar to the Sun have lived that long in the past and so we expect the Sun to have the same lifespan. But this is not prediction nor forecasting the future, is really a very good guess. Science itself is a really nice and educated guess. The problem is that we're much better at guessing what will happen to the Sun, let's say, compared to what will happen to the stock exchange in the next 10 years or to who the president of Rwanda will be in 15 to 20 years. David Hume has put down in writing the issue with induction better than a guy like me could ever do. From here (https://en.wikipedia.org/wiki/Problem_of_induction#David_Hume https://en.wikipedia.org/wiki/Problem_of_induction#David_Hum...): > Only through previous observation can it be predicted, inductively, what will actually happen with the balls. In general, it is not necessary that causal relation in the future resemble causal relations in the past, as it is always conceivable otherwise