New member - emerging asset classes outstrip historic assumptions issue

[xelaguy]

Hello, I'm wondering if any work has been done or consideration given to the
fact that at a retail investment level the types of investments globally that
are available at a click of a mouse bear no resemblance to what was available
100 years ago, or even 30 years ago. We have access to investments in
economies growing far faster than our own - there may not be enough
historical data to back test this in Firecalc, but it may be that going forward well diversified
portfolios with international component will return more than one based solely US stocks and bonds.

There is more that I could add on the subject, but brevity being the soul of wit.

 

[Nords]

Welcome to the board, xelaguy.

Hello, I'm wondering if any work has been done or consideration given to the
fact that at a retail investment level the types of investments globally that
are available at a click of a mouse bear no resemblance to what was available
100 years ago, or even 30 years ago. We have access to investments in
economies growing far faster than our own - there may not be enough
historical data to back test this in Firecalc, but it may be that going forward well diversified portfolios with international component will return more than one based solely US stocks and bonds.

Yes, and these international investments have been available to their country residents for as at least as long as U.S. investments have been to U.S. residents. You could get some feel for the diversification by reading "Triumph of the Optimists" by Dimson & Marsh.

They may not necessarily return more but they may be less volatile.

Do us a favor-- if you have more on this subject, please start a new thread in "FIRE & Money" and limit this thread to a "Hi, I am..." introduction.

 

[aenlighten]

Jeremy Siegel would say they should do better but investors will overpay for growth driving down returns. Growth requires a lot of capital, so it is not as productive as one would imagine. Even though Britain has been mature a long time, returns have been comparable to America. If they weren't, investors would drive down prices and up returns. Diversification is worthwhile though.