Stop telling me the market is up 170%

[Zorba]

According to Vanguard, the average annual return on stocks from 1926 to 2013 was 10.2%

https://personal.vanguard.com/us/insights/saving-investing/model-portfolio-allocations

That is a nominal return. The real return (i.e. inflation adjusted) is about 3 points lower. A nice data source for real and nominal S&P returns with dividends is here: S&P 500 index - Bogleheads

 

[jebmke]

Here was Swedroe's take on expected return, given current valuations

Expected Stock Returns Around The Globe [SPDR S&P 500 ETF Trust, iShares MSCI EAFE Index Fund (ETF)] - Seeking Alpha

I don't bother with nominal rates. I use ~4% or so real on equity and 0-1% real on fixed. For my conservative 40/60 that gets me in the 2-2.5% real range for expected returns.

 

[Turboslacker]

The low on the S&P 500 was 666. A bull market is a 20% rise off the low so that puts the bull at 799 for the S&P 500. I think we are in a secular bull that started 3/9/2009. You can have cyclical bear markets within a secular bull and that's what I'd say the 19% drop was, why quibble over 1%. This may well be like the secular bull from 1982 to 2000 and if it is it'll run another 10 or 15 years. We will only know in hind sight.

That's what I am hoping for, woohoo!

 

[Turboslacker]

Secular markets run in cycles, bulls last about 14-18 years and bears about 6-10 IIRC. Cyclical markets are a year or 2. We had an 18 year bull run from 82-2000 which is how I FIREd , a 9 year bear run from 2000 to 2009 and now I think we're in the next secular market which is a bull. You get cyclical markets within secular markets so you'll get bears within bulls and vice versa. If only we had a crystal ball eh?

I am a bit nervous and should rebalance but I keep shifting my AA between 40/60 to 50/50 to 60/40 so I'm not sure what to do cuz I don't know what my AA is (should be if I'm honest)! But I do think it's time to rebalance because I do believe in the long run this is how you win.

My one learning point of the day...had to google IIRC. Now I'm am much wiser.

 

[Turboslacker]

Makes sense. I will drink to the secular bull market, 2014 being the 5th year and have another 15 years to go. That will make my ER very secure.

Heck ya, I just signed up for Veremchuka's Investment Newsletter.

 

[Easy Rider]

I remember buying at the DOW 8000 level and friends just laughing at me. It was even hard for me, I refused to look at the markets myself and blindly maxed out my 401K contribution plus after-tax (which I recently roll-over to a ROTH IRA) - I was contributing 35% gross pay.

Then when the DOW clawed its way to 12,000 - the experts said that was the easy money. It wasn't easy - I even expected it to double dip like the great depression era. Then onto 16,000 - that seemed more like easy money to me. I remember May 6 last year when DOW hit 15,000, I woke up early to do my selling of all my 401K for preparing for the roll-over. Finally got out of 100% equities and now have a nice 70/30 portfolio with the 30 in short (less than 3 years) bonds. 8 years living expenses on the side!

 

[Major Tom]

That's what I am hoping for, woohoo!

Easy now. The last thing we need is someone utteirng W2R's dreaded Wh** word......

 

[haha]

OK, the market is not up 170%.

 

[W2R]

Easy now. The last thing we need is someone utteirng W2R's dreaded Wh** word......

Hey, I withdrew $50K from my portfolio to start my house-buying fund. I guess that was the anti-Wh**.

I could really use a secular bull market for the next 15 years. That would take me to age 80. I missed out on investing during the 90's (divorce, stupidity, etc) and I think a nice, strong, steady secular bull market through 2029 would be such fun.

Besides, it would be entertaining to listen to all the new, self-proclaimed investing experts who would probably appear on the board to "educate" us.

 

[Major Tom]

Hey, I withdrew $50K from my portfolio to start my house-buying fund. I guess that was the anti-Wh**.

I could really use a secular bull market for the next 15 years. That would take me to age 80. I missed out on investing during the 90's (divorce, stupidity, etc) and I think a nice, strong, steady secular bull market through 2029 would be such fun.

I had forgotten that you started your house-buying fund and withdrew money. That's it then - the perfect indicator that we are in a secular bull. The anti-Wh** - I love it!

Besides, it would be entertaining to listen to all the new, self-proclaimed investing experts who would probably appear on the board to "educate" us.

A 15 year secular bull would probably convince me that I was the world's smartest investor. That's OK - I'll take the chance that I'll make myself look foolish in front of you all if the reward is the steady march of my portfolio upwards. It's a small price to pay

 

[FinanceDude]

Besides, it would be entertaining to listen to all the new, self-proclaimed investing experts who would probably appear on the board to "educate" us.

The market can go down..........

 

[nash031]

The market can go down..........

Wait, WHAT?

 

[HFWR]

The market can go down..........

Housing will never go down... :-D

 

[Walt34]

The market can go down..........

"This time it's different".

 

[BTravlin]

Here was Swedroe's take on expected return, given current valuations

Expected Stock Returns Around The Globe [SPDR S&P 500 ETF Trust, iShares MSCI EAFE Index Fund (ETF)] - Seeking Alpha

I don't bother with nominal rates. I use ~4% or so real on equity and 0-1% real on fixed. For my conservative 40/60 that gets me in the 2-2.5% real range for expected returns.

Your expectations fall in line with this article I read yesterday.

http://online.wsj.com/news/articles/SB10001424052702303824204579423222177487850?mod=yahoo_free

"Strip out these one-off gains and inflation, Rob Arnott recently suggested, and investors ought more realistically to expect about 1.5% a year plus dividends—meaning, in the current environment, an annual return of about 3.5% in real terms. That's a far cry from 10%."

 

[imoldernu]

FIFO, LIFO, FILO, LILO.
Who will be LO? You, or your broker?

 

[LeavingOhio]

Everywhere you turn, breathless reports are aging this bull market at five years and touting the total return based on the dead-cat-bounce after the mortgage investment debacle.

The recovery period has created some nice returns, but anybody that wasn't contributing money throughout had to wait until the Dow passed through about 14,000 to start seeing growth again.

Is a recovery a bull before it ever reaches a new high?

Certainly the market climb since March 2009 has been GREAT for people (I'm one) who has contributed money since then, but due to reinvested dividends, all my stuff (not including any contributions) had returned to October 2007 levels well before the Dow got back to 14,000.

No matter what your level of investing has been since the crash and recovery though, I would still consider it a bull market from March 2009 to today. Dow was at 6400 in March 2009...today it is well past 16,000. If I were in retirement when the market crashed, I would have taken income from other sources to allow my retirement portfolio to recover. Partly because of that big drop, I have now planned to have ~3 years of expenses saved in cash before I retire as a safety net. If the market tanks, I will draw from that cash pile and perhaps also Social Security (if I'm old enough to when the market tanks), thus allowing my stocks to recover. With taking Social Security also during that time, I might be able to leave the stocks alone for 5 years. This would have easily been enough time during this last market crash. Then, if I do deplete my cash reserves, I would slowly replace with money I take out of the market once it has recovered.

 

[target2019]

Comcast is up around 500% from the bottom.
Had to say it.

 

[pb4uski]

That is a nominal return. The real return (i.e. inflation adjusted) is about 3 points lower. A nice data source for real and nominal S&P returns with dividends is here: S&P 500 index - Bogleheads

Correct. Generally all returns you see referred to are nominal returns unless otherwise indicated. For example, the returns the SEC requires fund companies to provide are all nominal returns.

For real returns you have to adjust and 3 points sounds about right.

 

[Al in Ohio]

The market is now up 169.9% with a standard deviation of 0.1%.

Is that better?

 

[RobLJ]

Bull

It's been a 5 year bull.
Due in part to the fact that we both were working and one of the boys was finishing college in '10 (so we increased 401/403k to close to the max) and due to my getting cautious in '06 and adjusting the portfolio allocation to 60-30, we were back to our former portfolio peak in Sep. 2009, which I find both amazing and an example of outstanding luck. The portfolio is now up almost 100% from the '07/'08 bubble peak, which I find both gratifying and a bit frightening.
The question of what I would have done as a FIRE and not working is a useful gedanken experiment, since I think investing while working and as a retiree are psychologically disconnected. That's one of the reasons I haunt the blog, to learn what the already FIRED do and think, so I'm thankful I've found the blog. I think the bucket approach, while not sound theoretically, is probably psychologically well-grounded on this point, in terms of investor behavior. But I'll see, 5-20 years on.

Certainly the market climb since March 2009 has been GREAT for people (I'm one) who has contributed money since then, but due to reinvested dividends, all my stuff (not including any contributions) had returned to October 2007 levels well before the Dow got back to 14,000.

 

[aja8888]

Comcast is up around 500% from the bottom.
Had to say it.

Even in light of 98% of their customers despising them.