Buffett: Don't expect returns over 7% over next century

[barbarus]

Yep, next town over from me is basically a small airstrip with a bunch of houses surrounding it, all with hangers for garages and wide taxiways between the homes and the airstrip. Pretty funny to drive through. Trippy wide streets so two planes can taxi past each other at the same time.

These things are called airparks.
They don't do as well as the developers hope, from what I've heard.

 

[clifp]

My parents [-]dad[/-] really wanted to live in one, but they are quite pricey. We visited with a couple of aviation friends who lived in one if Florida and other in Oregon. The Florida one was very cool, nice amenities, and their house/hanger was just down the block from John Travolta, and Harrison Ford was also looking at buying a place there.

General aviation never really took off in this country (or any country for that matter) like people predicted. There is a host of reasons, but I think danger and price are the main ones.

 

[cute fuzzy bunny]

I want my dang flying car. We were supposed to have them 8 years ago.

Mind you, I can get the one I have airborne for brief periods of time, which Gabe finds quite entertaining, but sustained flight still seems to be beyond my grasp.

 

[clifp]

I want the Jetsons personal rocket pack like that use to have at Disneyland . Strap that puppy on do a vertical take off, zoom off to work, shopping or the beach at about 100 MPH. Land in the parking lot and your done.

The next best thing to a transporter room..

 

[chinaco]

Diversification is likely to be the answer. Has anyone compared Mid-cap, Small-cap, Foreign company stocks along with bonds, gold/commodities.

It would be interesting to see those long-term historical charts stacked. I think IBD used to have a large poster one could order that showed a consolidated snapshot of that information along with historic descriptions of why (post analysis).

 

[Tadpole]

Now if equities are expected to be 7%, where would this put a real retirement asset allocation like 60/40 or 50/50? Do any of the past FIRECalc data series even have an example of 20 years of low/low returns? What would be the withdrawal rate for such a long term sluggish economy in returns from equities, bonds and cash?

 

[cute fuzzy bunny]

The next best thing to a transporter room..

Oh hey, dont even get me started on THAT one...

 

[free4now]

Given enough time, doesn't it always have to "revert to the mean," by definition? If not, there would be no mean. And I don't mean to sound mean by saying that.

What's interesting about the historical results is that they always seem to revert to the same mean.

 

[WilliamG]

I was originaly planning on 8% yearly returns, but Morningstar expects a return of only 7.5% for my portfolio going forward. So I now use 7% expected returns for my FIRE calculations. If everyone predicting 7% returns on stocks in the future happened to be on the low side, then I guess I'll FIRE sooner then expected!

Morningstar's expected future annual returns are:
4% on cash
5.5% on bonds
7,6% on US large caps
8.4% on US small caps
8.3% on foreign stocks

I assume these are nominal returns rather than real. Do you know what inflation rate they use for this projection?

 

[wildcat]

Can we update the return predictions if the S&P drops to 700?