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> the return on investment has been slowly and constantly going down since at least the 70s Curious if you have a source for that? > What does "adjusted for r

> the return on investment has been slowly and constantly going down since at least the 70s Curious if you have a source for that? > What does "adjusted for reinvested dividends" mean? Dividends are payed out in cash and this means the analysis assumes they're used to buy more shares. There's an argument that the American economy in the 20th century is itself a selection bias. It's the most successful economic period in history. Other countries in the same period or the world economy in other periods do not have such spectacular returns.

legolas2412 4y ago
> Curious if you have a source for that? Some people think that we are facing secular stagnation, and the economic growth is slowing down. The avg federal reserve interest rates have been falling at 2% per decade for 5 decades, and signifies less growth in the economy. Sure, this low interest rates have actually fueled the stock market boom as the value of future earnings is high, but the growth is not sustainable. For one, we are going to end up with some stable p/e ratio, and the growth of stock market because of low interest rates will stop. And two, the interest rates will also stop going down as fast, as a rate of say -10% sounds pretty bad in what it means for the economy (negative growth of that magnitude), so people do not think we will have such a situation.
- cheriot 4y ago
  I'd agree that the decline in interest rates (and the asset inflation it fueled) has a limit. However, the actual earnings of publicly traded companies[1] is also increasing! So the predicted bottom off a stable p/e keeps going up. To be honest, the belief that the market is overvalued is a big part of my motivation for buying individual stocks despite the overwhelming evidence that it's a fool's errand. [1] Using the S&P 500 as a proxy. There's non-linkable buttons to see the last 10, 20, 30 years https://www.macrotrends.net/1324/s-p-500-earnings-history https://www.macrotrends.net/1324/s-p-500-earnings-history

legolas2412 4y ago

> Curious if you have a source for that? Some people think that we are facing secular stagnation, and the economic growth is slowing down. The avg federal reserve interest rates have been falling at 2% per decade for 5 decades, and signifies less growth in the economy. Sure, this low interest rates have actually fueled the stock market boom as the value of future earnings is high, but the growth is not sustainable. For one, we are going to end up with some stable p/e ratio, and the growth of stock market because of low interest rates will stop. And two, the interest rates will also stop going down as fast, as a rate of say -10% sounds pretty bad in what it means for the economy (negative growth of that magnitude), so people do not think we will have such a situation.

cheriot 4y ago
I'd agree that the decline in interest rates (and the asset inflation it fueled) has a limit. However, the actual earnings of publicly traded companies[1] is also increasing! So the predicted bottom off a stable p/e keeps going up. To be honest, the belief that the market is overvalued is a big part of my motivation for buying individual stocks despite the overwhelming evidence that it's a fool's errand. [1] Using the S&P 500 as a proxy. There's non-linkable buttons to see the last 10, 20, 30 years https://www.macrotrends.net/1324/s-p-500-earnings-history https://www.macrotrends.net/1324/s-p-500-earnings-history