4 ms·

The NYTimes has a great visualization of S&P 500 returns for money invested any year between 1920 and 2009 and withdrawn between 1921 and 2010: http://www.nyti

by dap 10y ago

The NYTimes has a great visualization of S&P 500 returns for money invested any year between 1920 and 2009 and withdrawn between 1921 and 2010: http://www.nytimes.com/interactive/2011/01/02/business/20110102-metrics-graphic.html http://www.nytimes.com/interactive/2011/01/02/business/20110...

loeg 10y ago
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 would be red (or pink for long-term bonds, perhaps) across the board. Stocks look great in comparison. But picking a slightly more reasonable color scale would help.
- squeaky-clean 10y ago
  > 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.
  - loeg 10y ago
    3-7% looks more pink than beige to me, but I'm a little red-green colorblind, so what do I know. IMO it would make more sense to show 0-3% real return — strictly above inflation — as beige and 3-7% real return as a shade of green.
secondhandvape 10y ago
Excellent visual, I would love to see this updated for 2016. You can see that there are quite a few vertical slices where you will always result in a positive return. It's just a matter of how long you are willing to hold your money, and for what kind of return. That's why I'm attracted to index funds for investing. How do people feel about investing in the SP500 right now? I'm not too bullish considering the current peak and the US political future. https://www.google.com/finance?q=INDEXSP:.INX https://www.google.com/finance?q=INDEXSP:.INX
ricardobeat 10y ago
Yay, another viz perfect for the colorblind :D
tunesmith 10y ago
I brought up this chart as a counterpoint to the OP's graph in a separate discussion. The difference is that this one factors in "taxes and fees". In this chart, it says 1979-1999 is +8.2% per year. Using the OP's data source, 1979-1999 would be 12.464% (using https://dqydj.com/sp-500-return-calculator/ https://dqydj.com/sp-500-return-calculator/ which uses the same Schiller data set). That's 4.2% per year obliterated by "taxes and fees". That seems excessive for "taxes and fees", given that it's buy-and-hold. I don't know what to make of this discrepancy but I find it aggravating. Either Schiller's data has some strange assumptions built into it, or the OP's analysis draws improperly bullish conclusions from it, or the NYT chart is unreasonably bearish. Either way, I still strongly believe people should not be generally expecting their investments to quadruple in 20 years. There's a whole investment industry that is based off of bad assumptions, and it's keeping people from investing in actually producing value for themselves and others.
- cesarbs 10y ago
  > and it's keeping people from investing in actually producing value for themselves and others. What do you mean?
  - tunesmith 10y ago
    Well, starting a business is a good example - doing the work to find an actual market opportunity and investing in it. Or, I could scrimp to put that money in the S&P, or I could invest in myself through further education.
tbrooks 10y ago
It's unclear if the NYT accounts for dividend reinvestment. Leaving out compounding interest could massively affect the returns shown in the chart.
tomsaffell 10y ago
I did a similar analysis in 2008 to determine whether an n% drop in the index could be help inform an investment strategy: https://saffell.wordpress.com/2008/10/26/does-timing-the-market-work/ https://saffell.wordpress.com/2008/10/26/does-timing-the-mar...
dredmorbius 10y ago
That's from Ed Easterling's Crestmont Research. Easterling's updated the matrix since: http://www.crestmontresearch.com/stock-matrix-options/ http://www.crestmontresearch.com/stock-matrix-options/

by dap 10y ago

loeg 10y ago

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 would be red (or pink for long-term bonds, perhaps) across the board. Stocks look great in comparison. But picking a slightly more reasonable color scale would help.

squeaky-clean 10y ago
> 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.
- loeg 10y ago
  3-7% looks more pink than beige to me, but I'm a little red-green colorblind, so what do I know. IMO it would make more sense to show 0-3% real return — strictly above inflation — as beige and 3-7% real return as a shade of green.

secondhandvape 10y ago

Excellent visual, I would love to see this updated for 2016. You can see that there are quite a few vertical slices where you will always result in a positive return. It's just a matter of how long you are willing to hold your money, and for what kind of return. That's why I'm attracted to index funds for investing. How do people feel about investing in the SP500 right now? I'm not too bullish considering the current peak and the US political future. https://www.google.com/finance?q=INDEXSP:.INX https://www.google.com/finance?q=INDEXSP:.INX

ricardobeat 10y ago

Yay, another viz perfect for the colorblind :D

tunesmith 10y ago

I brought up this chart as a counterpoint to the OP's graph in a separate discussion. The difference is that this one factors in "taxes and fees". In this chart, it says 1979-1999 is +8.2% per year. Using the OP's data source, 1979-1999 would be 12.464% (using https://dqydj.com/sp-500-return-calculator/ https://dqydj.com/sp-500-return-calculator/ which uses the same Schiller data set). That's 4.2% per year obliterated by "taxes and fees". That seems excessive for "taxes and fees", given that it's buy-and-hold. I don't know what to make of this discrepancy but I find it aggravating. Either Schiller's data has some strange assumptions built into it, or the OP's analysis draws improperly bullish conclusions from it, or the NYT chart is unreasonably bearish. Either way, I still strongly believe people should not be generally expecting their investments to quadruple in 20 years. There's a whole investment industry that is based off of bad assumptions, and it's keeping people from investing in actually producing value for themselves and others.

cesarbs 10y ago
> and it's keeping people from investing in actually producing value for themselves and others. What do you mean?
- tunesmith 10y ago
  Well, starting a business is a good example - doing the work to find an actual market opportunity and investing in it. Or, I could scrimp to put that money in the S&P, or I could invest in myself through further education.

tbrooks 10y ago

It's unclear if the NYT accounts for dividend reinvestment. Leaving out compounding interest could massively affect the returns shown in the chart.

tomsaffell 10y ago

I did a similar analysis in 2008 to determine whether an n% drop in the index could be help inform an investment strategy: https://saffell.wordpress.com/2008/10/26/does-timing-the-market-work/ https://saffell.wordpress.com/2008/10/26/does-timing-the-mar...

dredmorbius 10y ago

That's from Ed Easterling's Crestmont Research. Easterling's updated the matrix since: http://www.crestmontresearch.com/stock-matrix-options/ http://www.crestmontresearch.com/stock-matrix-options/