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Loved this article, mostly because of the fact that it turns much of the normal perspective on markets on its head. Rather than looking at a best case or a simu

Loved this article, mostly because of the fact that it turns much of the normal perspective on markets on its head. Rather than looking at a best case or a simulated median case, looking at a worst case is pretty cool. What would make this more interesting would be to look at a constantly rebalanced portfolio that is a blend of stocks and bonds. That would have performed even better. @notastartup -- "the best investors" is a complicated statement. Usually investors are graded on an annual basis compared to the market. If you outperform the market and justify your fee (if your fee is 1%, you had better outperform by a lot more than that, or else an index fund would have been a safer way to go), you keep your job, are able to get more capital into your fund, and generally are more highly regarded as an investor. So while I think there is a ton of merit to using an approach like this (or using the rebalancing approach I mention above), this is not what makes successful professional investors successful. That can be ascribed to luck, a ton of luck, skill, nefarious dealings, or any other number of other good or not-so-good reasons.

gighi 12y ago
What would make this more interesting for me would be a pretty accurate answer to the question: "what are the chances that this could happen again if the guy started in 2014"? :)
- tormeh 12y ago
  Or better yet, what would have happened if he invested in inner-city property? Short of investing in Detroit that would probably go pretty well.
  - _mulder_ 12y ago
    Property prices are fuelled primarily by population growth. If we look 30 years ahead, it's likely that the population of rich world countries (especially Europe[1]) will decrease as the baby-boomers, sadly, disappear. That could be a huge chunk of the current home-owning population leaving lots of empty homes, often in quite desirable areas. It would be safe to assume this extra supply would cause demand, and therefore price, to fall in the next 30 years. Immigration could fill the gap but as the source countries grow in prosperity, perhaps immigration from them will reduce too. This all depends on whether or not population will continue to increase, indefinitely. [1] http://en.wikipedia.org/wiki/Projections_of_population_growth http://en.wikipedia.org/wiki/Projections_of_population_growt...
    - gjmulhol 12y ago
      Property prices are also tough to predict as preferences change and the general buying power of the economy changes. A major issue with the most recent housing slump is that many young people, who would be first time homebuyers, are choosing not to purchase a home. This is reducing liquidity for those that would normally sell their starter homes to them and upgrade. While general property values will probably rise, it is a very illiquid asset class and highly dependent on geographical preferences.
- gjmulhol 12y ago
  Provided the overall market and economy continue to grow in spite of short term volatility, it would happen again. If one honestly believes that the whole market is going to go down over time, then probably best to look at bonds or precious metals.
  - gighi 12y ago
    Yeah, the condition you mention is the key: what are the odds that the US economy (or the overall world average, if you're diversified with a global index) will continue to grow as gloriously as it has done in the past 50 years? (when the guy started investing)

gighi 12y ago

What would make this more interesting for me would be a pretty accurate answer to the question: "what are the chances that this could happen again if the guy started in 2014"? :)

tormeh 12y ago
Or better yet, what would have happened if he invested in inner-city property? Short of investing in Detroit that would probably go pretty well.
- _mulder_ 12y ago
  Property prices are fuelled primarily by population growth. If we look 30 years ahead, it's likely that the population of rich world countries (especially Europe[1]) will decrease as the baby-boomers, sadly, disappear. That could be a huge chunk of the current home-owning population leaving lots of empty homes, often in quite desirable areas. It would be safe to assume this extra supply would cause demand, and therefore price, to fall in the next 30 years. Immigration could fill the gap but as the source countries grow in prosperity, perhaps immigration from them will reduce too. This all depends on whether or not population will continue to increase, indefinitely. [1] http://en.wikipedia.org/wiki/Projections_of_population_growth http://en.wikipedia.org/wiki/Projections_of_population_growt...
  - gjmulhol 12y ago
    Property prices are also tough to predict as preferences change and the general buying power of the economy changes. A major issue with the most recent housing slump is that many young people, who would be first time homebuyers, are choosing not to purchase a home. This is reducing liquidity for those that would normally sell their starter homes to them and upgrade. While general property values will probably rise, it is a very illiquid asset class and highly dependent on geographical preferences.
gjmulhol 12y ago
Provided the overall market and economy continue to grow in spite of short term volatility, it would happen again. If one honestly believes that the whole market is going to go down over time, then probably best to look at bonds or precious metals.
- gighi 12y ago
  Yeah, the condition you mention is the key: what are the odds that the US economy (or the overall world average, if you're diversified with a global index) will continue to grow as gloriously as it has done in the past 50 years? (when the guy started investing)