5 ms·
What Drives Stock Market Returns? (2018)
- deleted 8mo ago[deleted]
- salkahfi 8mo ago(2018)
- deadbabe 8mo agoThe fact that this was from 2018 and people were saying the same thing about the stock market as what people are saying today, gives me conviction that it’s best to just not worry about it and just buy stocks and start making money.
- david-gpu 8mo agoIndeed. Timing a bear market is a waste of effort. Just look at historical returns: more often than not the stock market will be at all-time highs. This has been going on for over a century. Dollar cost averaging (investing the same percentage of every paycheck) is the winning strategy over the medium and long run.
- rwmj 8mo agoIt's a shame Google doesn't let us use a log scale on that graph.
- techterrier 8mo agovibes
- dehrmann 8mo ago> In the short run, the market is a voting machine but in the long run, it is a weighing machine And we vote on vibes.
- rvz 8mo agoprinting your currency to zero.
- munk-a 8mo agoThat's a way to bolster it, certainly. None of the listed companies are on the hook for US debt and they'll just relocate if the US becomes a liability. Their value isn't (greatly) at danger of collapse if the debt becomes overwhelming. There are also healthy ways to encourage economic growth, but those are too boring for the current moment.
- randerson 8mo agoThe US is the largest market for most US companies, so if consumer buying power is erased (e.g. through a treasury default or inflating our way out of the debt) those companies will drop substantially in value.
- munk-a 8mo agoPotentially that will be the case in actual terms. Likely that will be the case in terms of their growth rate. But (for most) that certainly won't be the case in relative terms - the large US corporations would ride through such a decline taking an even bigger slice of the global pie.
- RickJWagner 8mo agoIf you read that article, you are a prime candidate to benefit from Bogleheads.org Check it out. You’ll learn the easy, certain, slow way to accumulate wealth. Your future self will be very happy.
- lich_king 8mo ago> certain And by "certain", you mean "not certain". The core tenet are index funds, and while for the average person, they're probably better than stock-picking, you're absolutely exposing yourself to market risk.
- grunder_advice 8mo agoYeah, in particular now that index funds are well known and very common one wonders what risk one is exposed to when one is dumping everything into broad market index funds.
- jrowen 8mo agoWe should also mention that it's "not certain" that you will return safely if you leave your house.
- biophysboy 8mo ago>The PE ratio reflects earnings today, but the most important metric is projected future earnings. I think the key words are "projected future". Sometimes that estimation is easy; sometimes it is much harder. New tech introduces uncertainty. Speculative entrepreneurs tell stories that multiply the uncertainty.
- wilkommen 8mo agoIdk how people write posts like this anymore. Clearly the stock market isn't rational, and prices of stocks are not tied to financial fundamentals. Stocks are essentially a deflationary alternative currency that only people with disposable income can afford. The rich (and to a smaller extent, the middle class) take the currency which devalues every year (USD) and use it to buy the currency which increases in value every year (stocks and other digital assets), and this is part of the funnel that increases the wealth of the rich at the expense of the poor and middle class. People who think valuations of stocks are tied to fundamentals are smoking medical-grade copium. I too wish that the backbone of our financial system was a not a corrupt, rigged game that benefits a small and decreasing number of people every year, but it is.
- tastyfreeze 8mo agoThe way to fix that is to stop debasing the currency. I stopped buying stocks a few years ago. The moment there is a contraction of credit or circulating currency we will see a 1929 style crash. Not worth the risk anymore.
- yks 8mo agoWhat does "contraction of circulating currency" look like in the post-cash world?
- tastyfreeze 8mo agoA drastic rise in interest rate or actual destruction of bills.
- david-gpu 8mo agoWhat incentive do any of the few actors with the ability to effect that change have to actually pull that lever? I imagine that you have spent a lot of time thinking about this, and I would like to understand your position.
- christophilus 8mo agoPassive flows. Mike Green has covered this well for a long time. Here’s a recentish interview: https://m.youtube.com/watch?v=WSpR770JvXg&pp=ygUYbWlrZSBncmVlbiBwYXNzaXZlIGZsb3dz https://m.youtube.com/watch?v=WSpR770JvXg&pp=ygUYbWlrZSBncmV...
- sambaumann 8mo agoFor reference when this was written in 2018, a P/E of the S&P of 24 was considered inflated. It stands at 29.34 as of now.
- david-gpu 8mo agoIt goes to show that time in the market beats timing the market. You may get lucky predicting a downturn, but it's just gambling at that point. Just look at the past century of returns across the world.
- ArtTimeInvestor 8mo ago"...the slowing GDP growth rate in America..." What are they talking about? https://fred.stlouisfed.org/series/GDP https://fred.stlouisfed.org/series/GDP
- OKRainbowKid 8mo agoI don't see the contradiction?
- ArtTimeInvestor 8mo agoI don't see anything that looks like a "slowing" in mid 2018. Growth in Q1, Q2 and Q3 2018 was higher than anything that came before.
- addaon 8mo agoSlowing refers to a change in the derivative, in this context. Slowing growth would be a decrease in change in GDP per year — a decrease in growth. But the claim is that the growth (first derivative) is what’s slowing — that is, the second derivative of GDP w.r.t. time went negative, which does seem to be the case in mid 2018 from the linked chart.
- fogcity 8mo agoClick the "Edit Graph" button, and change the unit to "Change from Year Ago, Billions of Dollars" to see the evidence.
- alecco 8mo agohttps://pricedingold.com/us-gdp/ https://pricedingold.com/us-gdp/
- ArtTimeInvestor 8mo agoI don't see anything that looks like a "slowing" in mid 2018. Q1, Q2 and Q3 2018 are all higher than anything that came before.
- reedf1 8mo agoThis just isn't right.
- ProllyInfamous 8mo ago>"Time IN the markets typically beats timING the markets."
- Temporary_31337 8mo agoOne thing I learned about logic is that if you start with a false statement, whatever comes next doesn't matter "almost all valuations and returns are driven by corporate earnings" no they are not, at least not anymore.
- crazygringo 8mo agoThen you're going to have a hard time learning any subject. Because it's pretty common for educational materials to start with the first-order approximation, then go into the places where you need second-order corrections to it. If you think the first-order approximation is false because there are exceptions, and you aren't even willing to read a few paragraphs down to find out about the exceptions and nuances, then hey, it's your loss.
- deleted 8mo ago[deleted]
- burnt-resistor 8mo agoInflation, financialization, price-profit spirals, and tulip bulbs.