5 ms·

I suggest reading some of Siegel's books. There are good records going back two hundred years. The stock market has beaten every other asset class, every sing

by xiaoma 16y ago

I suggest reading some of Siegel's books. There are good records going back two hundred years. The stock market has beaten every other asset class, every single decade between 1810 and now. You might make an argument that things will change due to a technological singularity, but stock performance has been remarkably consistent over the long run. http://caps.fool.com/Blogs/1802-2009-performance-of/282249 http://caps.fool.com/Blogs/1802-2009-performance-of/282249

fanboy123 16y ago
My lifetime might not be long enough for "the long run." Any longer than that and your 200 years means very little.
- Unseelie 16y ago
  The argument is that stocks have been the best asset class investment in each decade for the last two hundred years, not that it takes two hundred years. I'm going to guess that you'll live for at least another decade, and tell you to go right ahead and consider that the long run. If you've any multiples of decades, you're even more set.
  - _delirium 16y ago
    That certainly isn't true. For example, stocks were not the best asset class in the 2000s (bonds did much better this past decade). The linked page is just giving broad "stocks are generally better", but isn't doing decade-by-decade comparisons (which would be interesting to see).
    - Unseelie 16y ago
      Granted. But aside from the last decade, the article does claim that stocks win. (from 1930 to 1996). The recent decade is astoundingly bad...especially considering all the neat, new things we've gained..
      - HSO 16y ago
        off the top of my head, US stocks in the 70s were also flat over about a decade; as they were in the 30s (counting from '29); and probably some other decade before that, but stocks were not mainstream then
  - mistermann 16y ago
    > The argument is that stocks have been the best asset class investment in each decade for the last two hundred years, not that it takes two hundred years. But that is factually incorrect. "stocks have been the best asset class investment in each decade for the last two hundred years" That is a totally incorrect statement. To be proper I should post specific statistics rebutting this, but I don't have them at this time. If you are genuinely interested you can look it up yourself.
HSO 16y ago
You (or Siegel) may suffer survivorship bias. Yes, the US stock market has performed well. But what about early Russian stocks, German stocks, French stocks? I'd venture a wild guess that investors got pretty much wiped out between 1917, say, and 1945? Also, the chances are high that you can find some time grid for which "every single decade" will show whatever you want it to show. For example, between 2000 and 2010, US aggregate stock market performance is... roundabout zero?
- nostrademons 16y ago
  I upvoted you for insightful analysis, but I think survivorship bias might be appropriate here. If the economy & political system changes the way it did in Russia, Germany, and France, it's basically moot where you've put your assets. You'll be wiped out either way; the important thing then is that you survive and can rebuild afterwards. As one of my mentors once told me, "Optimize for the case where we aren't fucked, because if we are, there's nothing we can do about it." He was talking about software architecture and startups, but it applies to finance as well.
  - _delirium 16y ago
    In some cases everything is equally bad, but not in others. In France, for example, the stock market was wiped out, but lots of other assets survived the war, especially property (land ownership wasn't generally interfered with), and portable valuables like gold and jewelry. So if you were picking places to put your money in 1935, there are definite winners and losers--- buying land was a good option.
    - vorg 16y ago
      Diversify across geographies, e.g. always hold positions in America, Europe, and China.
  - HSO 16y ago
    At first, I thought we had a misunderstanding but now that I see your point, I have to disagree. Survivorship bias basically is a sampling error and, in this case, leads you to underestimate the risk of your investments, both of which are never a good thing. Moreover, in almost all cases, it's a tad fatalistic to say "there's nothing we can do about it". I mean, maybe if the world goes under, but anything short of that, I'd like to think there's always sth I can do about it (even if that's just trading one bias for another... ;)

by xiaoma 16y ago

fanboy123 16y ago

My lifetime might not be long enough for "the long run." Any longer than that and your 200 years means very little.

Unseelie 16y ago
The argument is that stocks have been the best asset class investment in each decade for the last two hundred years, not that it takes two hundred years. I'm going to guess that you'll live for at least another decade, and tell you to go right ahead and consider that the long run. If you've any multiples of decades, you're even more set.
- _delirium 16y ago
  That certainly isn't true. For example, stocks were not the best asset class in the 2000s (bonds did much better this past decade). The linked page is just giving broad "stocks are generally better", but isn't doing decade-by-decade comparisons (which would be interesting to see).
  - Unseelie 16y ago
    Granted. But aside from the last decade, the article does claim that stocks win. (from 1930 to 1996). The recent decade is astoundingly bad...especially considering all the neat, new things we've gained..
    - HSO 16y ago
      off the top of my head, US stocks in the 70s were also flat over about a decade; as they were in the 30s (counting from '29); and probably some other decade before that, but stocks were not mainstream then
- mistermann 16y ago
  > The argument is that stocks have been the best asset class investment in each decade for the last two hundred years, not that it takes two hundred years. But that is factually incorrect. "stocks have been the best asset class investment in each decade for the last two hundred years" That is a totally incorrect statement. To be proper I should post specific statistics rebutting this, but I don't have them at this time. If you are genuinely interested you can look it up yourself.

HSO 16y ago

You (or Siegel) may suffer survivorship bias. Yes, the US stock market has performed well. But what about early Russian stocks, German stocks, French stocks? I'd venture a wild guess that investors got pretty much wiped out between 1917, say, and 1945? Also, the chances are high that you can find some time grid for which "every single decade" will show whatever you want it to show. For example, between 2000 and 2010, US aggregate stock market performance is... roundabout zero?

nostrademons 16y ago
I upvoted you for insightful analysis, but I think survivorship bias might be appropriate here. If the economy & political system changes the way it did in Russia, Germany, and France, it's basically moot where you've put your assets. You'll be wiped out either way; the important thing then is that you survive and can rebuild afterwards. As one of my mentors once told me, "Optimize for the case where we aren't fucked, because if we are, there's nothing we can do about it." He was talking about software architecture and startups, but it applies to finance as well.
- _delirium 16y ago
  In some cases everything is equally bad, but not in others. In France, for example, the stock market was wiped out, but lots of other assets survived the war, especially property (land ownership wasn't generally interfered with), and portable valuables like gold and jewelry. So if you were picking places to put your money in 1935, there are definite winners and losers--- buying land was a good option.
  - vorg 16y ago
    Diversify across geographies, e.g. always hold positions in America, Europe, and China.
- HSO 16y ago
  At first, I thought we had a misunderstanding but now that I see your point, I have to disagree. Survivorship bias basically is a sampling error and, in this case, leads you to underestimate the risk of your investments, both of which are never a good thing. Moreover, in almost all cases, it's a tad fatalistic to say "there's nothing we can do about it". I mean, maybe if the world goes under, but anything short of that, I'd like to think there's always sth I can do about it (even if that's just trading one bias for another... ;)