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Small caveat - Looking at 10 yr average right now is not a good measurement for future returns. 10 years ago stocks were just coming out of a recession. Right n

Small caveat - Looking at 10 yr average right now is not a good measurement for future returns. 10 years ago stocks were just coming out of a recession. Right now they are at all time highs.

krn 7y ago
That's a good point, but Nasdaq-100 had an average annual return of 13% even when counting from December 31, 2007 – which is before the beginning of the last recession.
- Ididntdothis 7y ago
  You can’t take the absolute low point as your starting point and call it low risk.
  - krn 7y ago
    The absolute low point was in 2008, when Nasdaq-100 went down by -40.54%. The last 15 years: 2019 35.23% 2018 -3.88% 2017 28.24% 2016 7.50% 2015 5.73% 2014 13.40% 2013 38.32% 2012 15.91% 2011 -1.80% 2010 16.91% 2009 43.89% 2008 -40.54% 2007 9.81% 2006 9.52% 2005 1.37% 2004 8.59% At no point I called it low risk. It's high risk / high return. The risk of high financial exposure to such funds can only be taken until 40, because one needs to be able to not sell during the entire economic downturn.
    - Izkata 7y ago
      > At no point I called it low risk. The person who originally mentioned those percentages and started this comment thread (and since edited it down) said low/medium risk.
      - krn 7y ago
        Most index-fund based retirement investment packages focus on 80/20, 60/40, and 40/60 stock-to-bond split, depending on your current age. Nasdaq-100 or SP-500 can be a part of a medium-risk investment portfolio as long as the exposure to them is adjusted based on the period of time left until retirement. It's a medium-risk strategy to keep up to 80% of your retirement portfolio invested in Nasdaq-100 or SP-500 in your 20s, up to 60% in your 40s, and up to 40% in your 60s. As long as the rest of the portfolio is invested in low-risk government bonds.
Ididntdothis 7y ago
Agreed. You can’t assume that the current upswing will go on forever. People learned this in 2000 and 2008.
- krn 7y ago
  Nasdaq-100 dropped by -41.89% in 2008, and then went up by +53.54% in 2009. That's it. The only other negative performance since 2002 was in 2018 (-1.04%). If you are a kind of investor who starts selling off in the middle of an economic downturn, of course you will lose.
  - nuclearnice1 7y ago
    How about 2000?
    - krn 7y ago
      The 2000-2002 were an anomaly in the entire 35 years history of Nasdaq-100: https://en.wikipedia.org/wiki/NASDAQ-100#Annual_Returns https://en.wikipedia.org/wiki/NASDAQ-100#Annual_Returns
      - nuclearnice1 7y ago
        Wow. On the way up and down. What a time.
  - mcqueenjordan 7y ago
    Just worth noting: 3/5 * 3/2 = 9/10. i.e., dropping 40% then going up 50% doesn't get you back up to 100%. Not saying you implied that it does. Just making this fact explicit.

Small caveat - Looking at 10 yr average right now is not a good measurement for future returns. 10 years ago stocks were just coming out of a recession. Right now they are at all time highs.

krn 7y ago

That's a good point, but Nasdaq-100 had an average annual return of 13% even when counting from December 31, 2007 – which is before the beginning of the last recession.

Ididntdothis 7y ago
You can’t take the absolute low point as your starting point and call it low risk.
- krn 7y ago
  The absolute low point was in 2008, when Nasdaq-100 went down by -40.54%. The last 15 years: 2019 35.23% 2018 -3.88% 2017 28.24% 2016 7.50% 2015 5.73% 2014 13.40% 2013 38.32% 2012 15.91% 2011 -1.80% 2010 16.91% 2009 43.89% 2008 -40.54% 2007 9.81% 2006 9.52% 2005 1.37% 2004 8.59% At no point I called it low risk. It's high risk / high return. The risk of high financial exposure to such funds can only be taken until 40, because one needs to be able to not sell during the entire economic downturn.
  - Izkata 7y ago
    > At no point I called it low risk. The person who originally mentioned those percentages and started this comment thread (and since edited it down) said low/medium risk.
    - krn 7y ago
      Most index-fund based retirement investment packages focus on 80/20, 60/40, and 40/60 stock-to-bond split, depending on your current age. Nasdaq-100 or SP-500 can be a part of a medium-risk investment portfolio as long as the exposure to them is adjusted based on the period of time left until retirement. It's a medium-risk strategy to keep up to 80% of your retirement portfolio invested in Nasdaq-100 or SP-500 in your 20s, up to 60% in your 40s, and up to 40% in your 60s. As long as the rest of the portfolio is invested in low-risk government bonds.

Ididntdothis 7y ago

Agreed. You can’t assume that the current upswing will go on forever. People learned this in 2000 and 2008.

krn 7y ago
Nasdaq-100 dropped by -41.89% in 2008, and then went up by +53.54% in 2009. That's it. The only other negative performance since 2002 was in 2018 (-1.04%). If you are a kind of investor who starts selling off in the middle of an economic downturn, of course you will lose.
- nuclearnice1 7y ago
  How about 2000?
  - krn 7y ago
    The 2000-2002 were an anomaly in the entire 35 years history of Nasdaq-100: https://en.wikipedia.org/wiki/NASDAQ-100#Annual_Returns https://en.wikipedia.org/wiki/NASDAQ-100#Annual_Returns
    - nuclearnice1 7y ago
      Wow. On the way up and down. What a time.
- mcqueenjordan 7y ago
  Just worth noting: 3/5 * 3/2 = 9/10. i.e., dropping 40% then going up 50% doesn't get you back up to 100%. Not saying you implied that it does. Just making this fact explicit.