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Old 12-06-2018, 08:56 AM   #61
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Washington has nothing to do with Bogle's forecast - it is simple math. The 10 year yield for bonds, current dividend yield plus earnings growth minus P/E contraction for stocks.

The last two elements are Bogle's forecasts, but his numbers are within historical norms.

Really?
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Old 12-06-2018, 09:39 AM   #62
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I agree. If people think returns will be higher (or lower), share why and act accordingly.

Even if one disagrees with Mr. Bogle, it seems a bit shortsighted to just write it off and ignore it. The man is intelligent. Also, this debate is over the absolute number, which (IMO) is less relevant, and ignores the framework and methodology Bogel uses, which (IMO) is more meaningful.
He's not really saying anything, and based on his past years he's not been accurate. Here's my predictions, some years will be great, some will be good, some will be bad and others will be downright terrible. I'll go as far as to say the next year will be much leaner than the past 3-5, and probably see a drop in markets driven by recent changes in taxes, world economics and other unrests that makes the market react irrationally and volitility to the downside, offsetting the irrational upside from the past couple of years.
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Old 12-06-2018, 10:02 AM   #63
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I believe Bogle's intention is to temper the expectation of investors. Shiller's has been the same.

In fact, a couple of years ago, in an interview Shiller warned that young people needed to save a lot more for retirement than they thought they needed to. Of course, the market was rising like crazy at that time, and they laughed at him. And the media has been flooded with articles about young 30-something people dropping out of the workforce with less money than us geezers did in our 50s and 60s.

We shall see who's right. But as for me, I have been living fine on 2.6% WR, and if the market shrinks my stash, that WR may go up to 4%. I will not be happy, but it does not change my lifestyle. And then, there's SS if I need it.
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Old 12-06-2018, 10:10 AM   #64
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He's not really saying anything, and based on his past years he's not been accurate.
Looks to me like he said something pretty specific.
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Over the next decade, stocks will return an average of 4% annually while bonds will earn 3.5% annually, he forecast. Both predictions are significantly lower than historic returns since 1974 of 11.7% for stocks and 8% for bonds.
He’s not forecasting next year will be 4%, he is projectng the annualized total rate of return over the next 10 years.

It’s not about being accurate. I think it makes sense to understand and learn from his methodology and projection.
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Old 12-06-2018, 10:17 AM   #65
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... the market return was 0, after accounting for dividend and inflation. ...
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... the average is 7% ...
I think you guys are talking apples and oranges. 7% is the nominal return, zero is a constant dollar aka purchasing power return.

I think @NW-Bound's assertion could better be stated as " .. during those periods an equity investor's purchasing power was retained but did not grow. ... " And, actually, that is not at all a bad result.

A problem with this type of discussion, too, is that endpoints can often be cherry picked to support the poster's view. A more serious study would involve looking at every ten-year period and every twenty-year period. There have been 52 ten-year periods since 1965, @NW-Bound's date. How many of them yielded zero real growth?
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Old 12-06-2018, 10:21 AM   #66
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I believe Bogle's intention is to temper the expectation of investors. Shiller's has been the same.
of course these guys sandbag, hard

why wouldn't they?
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Old 12-06-2018, 10:22 AM   #67
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Bogle is talking about the next 10 years. I just pointed out that there have been 10-year periods even worse.

So, what Bogle says is not so bad, and I would not mind having that.

If anyone wishes for more, he is certainly entitled to do so. It's still a free society.

PS. I forgot that even in not-so-free societies, people can still harbor any thoughts that they want. They just cannot post them publicly as we do.
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Old 12-06-2018, 11:41 AM   #68
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Looks to me like he said something pretty specific.

He’s not forecasting next year will be 4%, he is projectng the annualized total rate of return over the next 10 years.

It’s not about being accurate. I think it makes sense to understand and learn from his methodology and projection.
Show me how well he has predicted the past 10 years and and then years before that. Everyone has someone they follow, I just include him with that of a dozen other opinions.
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Old 12-06-2018, 12:04 PM   #69
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Really. Bogle has used the same formula for years.
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Old 12-06-2018, 12:08 PM   #70
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Works great for me as I am using 2% real total return for my retirement planning. 1.75% + dividends is just peachy for me.
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Old 12-07-2018, 03:43 PM   #71
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Here you go:

Guru Grades

It's a bit dated (2005 - 2012 data) but I doubt the bottom line of an average accuracy of 47% has changed much.


Interesting data. Louis Navellier’s Blue Chip Growth newsletter is one I’ve followed over the years. Even though his average % right is only 60%, the data says that his Blue Chip Growth newsletter has consistently outperformed the market index. Interesting.
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Old 12-07-2018, 04:04 PM   #72
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We’re kind of new to ER - only been retired for 2 years. I could be wrong, but I see no reason not to assume that markets will perform similarly over the long term as they have in the past. I can’t predict the short term. Whenever the next inevitable correction happens, it happens, and it shouldn’t affect our plans too much. Maybe we’ll start SS and/or pension sooner than planned so we can stay fully invested until the market comes back, as it always has over time. The average correction doesn’t last too long.
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Old 12-07-2018, 04:27 PM   #73
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We’re kind of new to ER - only been retired for 2 years. I could be wrong, but I see no reason not to assume that markets will perform similarly over the long term as they have in the past. I can’t predict the short term. Whenever the next inevitable correction happens, it happens, and it shouldn’t affect our plans too much. Maybe we’ll start SS and/or pension sooner than planned so we can stay fully invested until the market comes back, as it always has over time. The average correction doesn’t last too long.
If this is just a correction, it should be over within 45 days based on historical data.
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Old 12-07-2018, 05:42 PM   #74
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If this is just a correction, it should be over within 45 days based on historical data.
What data? I'm looking at Yardeni's nice report and by eyeball it looks like common corrections last maybe 60 to 90 days, and 100+ days is not uncommon.

He updates this daily: https://www.yardeni.com/pub/sp500corrbear.pdf
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Old 12-07-2018, 06:08 PM   #75
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Bogle did not talk about the ongoing correction.

People keep confusing short-term corrections with longer-term returns. The difference between them is like that between climate and weather.

It is not possible to predict when the next hurricane will hit Miami. But it is possible to track the average temperature, and see that it is creeping up from one decade to the next.
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Old 12-07-2018, 10:15 PM   #76
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Bogle did not talk about the ongoing correction.

People keep confusing short-term corrections with longer-term returns. The difference between them is like that between climate and weather.

It is not possible to predict when the next hurricane will hit Miami. But it is possible to track the average temperature, and see that it is creeping up from one decade to the next.

Brilliant analogy!
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Old 12-07-2018, 10:52 PM   #77
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What data? I'm looking at Yardeni's nice report and by eyeball it looks like common corrections last maybe 60 to 90 days, and 100+ days is not uncommon.

He updates this daily: https://www.yardeni.com/pub/sp500corrbear.pdf
A proper correction averages 4 months with a decline of 13.8%. If you go back to late September that would bring you to mid Jan or about 45 days from here.
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Old 12-08-2018, 05:19 AM   #78
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I have a great deal of respect for Mr Bogle. Ditto for Professor Shiller. The question worth asking is "Is this forecast actionable"?

The issue is that markets can be irrational for a very long time, and can make forecasters look foolish in-spite of the very logical reasoning of the forecaster.
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Old 12-08-2018, 07:09 AM   #79
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I was just reading an article (bonds side) from realclearmarkets.com, well, it's actually a pointer to an article in forbes.com

"Against Predictions Of Biggest Names In Finance, Bonds Rally"

Names Jamie Dimon, Jeffrey Gundlach, Ray Dalio, Bill Gross, Paul Tudor. All these people are very very smart people.

From the article:
"The point is not to pounce on the predictions of prominent money managers, but to illustrate how prevalent the idea was on Wall Street that yields were set to rise. "

https://www.forbes.com/sites/nathanv.../#347667c32a95
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Old 12-08-2018, 07:30 AM   #80
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Bogle did not talk about the ongoing correction.

People keep confusing short-term corrections with longer-term returns. The difference between them is like that between climate and weather.

It is not possible to predict when the next hurricane will hit Miami. But it is possible to track the average temperature, and see that it is creeping up from one decade to the next.
Very well explained once again. Thank you.
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