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Important to remember that they’re averaging over a decade to get that annual return figure. I still hear 10% thrown around as a rough estimate (if you believe

by gdubs 9y ago

Important to remember that they’re averaging over a decade to get that annual return figure. I still hear 10% thrown around as a rough estimate (if you believe anyone is capable of making such a prediction) — though Jack Boggle has been cautioning that we should expect much lower returns over the next twenty years (more like 3-4%).

mancerayder 9y ago
But if that's true, isn't that just keeping, just barely, with inflationary predictions? Especially given the new tax bill increases the deficit wildly, which will lead to a bond glut / money printing exercise? If so, what's the market going to do, if not reallocate capital from the stock market to a less risky asset?
- gdubs 9y ago
  I mean, I honestly have no idea. The concerns about inflation are real; we have high employment, and a relatively strong economy. Stocks (and Real Estate in certain areas) are at high valuations already. The tax bill is stimulus at a time when we don’t really need it - and it doesn’t address inequality, which economists like Robert Gordon consider one of the major headwinds against lifting productivity. I think it’s the Dutch who have a saying that the point of investing isn’t to make money - it’s to not lose what you already have. Buffet has said something like, “I’d rather have a lumpy 12% than a smooth 10%”. Higher risk can mean higher reward. I’m not offering investment advice; but for myself, I still think being invested in stocks for the long haul is smart. As they say, if it isn’t, then there are bigger problems to worry about. Doesn’t hurt to hedge against some “black swan” events too.
  - dnautics 9y ago
    Just be wary about advice from buffet. He's rich enough that he can basically buffer swings in the market. For the rest of us, employment might be market-procyclical: We lose the ability to buy in at the bottom of the market because we're at employment risk and maintaining personal cash reserves is critical and it's more likely that we have to sell off to stay afloat.
    - gdubs 9y ago
      For sure. That’s why a safety net is a core of so many strategies. And again, amateur opinions here - not offering investment advice.

by gdubs 9y ago

mancerayder 9y ago

But if that's true, isn't that just keeping, just barely, with inflationary predictions? Especially given the new tax bill increases the deficit wildly, which will lead to a bond glut / money printing exercise? If so, what's the market going to do, if not reallocate capital from the stock market to a less risky asset?

gdubs 9y ago
I mean, I honestly have no idea. The concerns about inflation are real; we have high employment, and a relatively strong economy. Stocks (and Real Estate in certain areas) are at high valuations already. The tax bill is stimulus at a time when we don’t really need it - and it doesn’t address inequality, which economists like Robert Gordon consider one of the major headwinds against lifting productivity. I think it’s the Dutch who have a saying that the point of investing isn’t to make money - it’s to not lose what you already have. Buffet has said something like, “I’d rather have a lumpy 12% than a smooth 10%”. Higher risk can mean higher reward. I’m not offering investment advice; but for myself, I still think being invested in stocks for the long haul is smart. As they say, if it isn’t, then there are bigger problems to worry about. Doesn’t hurt to hedge against some “black swan” events too.
- dnautics 9y ago
  Just be wary about advice from buffet. He's rich enough that he can basically buffer swings in the market. For the rest of us, employment might be market-procyclical: We lose the ability to buy in at the bottom of the market because we're at employment risk and maintaining personal cash reserves is critical and it's more likely that we have to sell off to stay afloat.
  - gdubs 9y ago
    For sure. That’s why a safety net is a core of so many strategies. And again, amateur opinions here - not offering investment advice.