S&P Cumulative Total Return Lags T-Bills From 1997!

[NW-Bound]

I retired 1993 before your chart starts and my 60/40ish balanced index tripled and then some over the period ...

The stock market performance was really good in the 90s. I was not in my prime earning years, and additionally was too busy with raising a family, and also being a geek, so did not fully "participate" in this rally. Still, I did not do too bad.

Looking back, I think it is accepted among economists that the above period performance was due to the "peace dividend" when the Soviet block collapsed, plus the rise of the technologies that improved producticity, e.g. factory robots, computerization, communications, etc...

In this forum, I have seen threads started by younger people who lamented that they missed out on the goin' buster decade of the 90s. Back then, you could hardly go wrong because nearly every stock went up. You either won big, or won small (like I did).

Things have been a bit tougher since 2000. What is the next thing that drives growth? Other than investments in alternative energy, and technologies to help conservation, can any of us suggest something else?

.

 

[ats5g]

Over at the VD forum, a poster had asked about if it would've been better to invest in stocks or bonds over her past saving timeframe, which was 1988-present. So I did up a little spreadsheet to see. Feel free to play around with it. In addition to the individual funds [VWESX, VUSTX, VBMFX, + VFINX] I wanted to see how a balanced portfolio of stocks and bonds did if one was contributing to the portfolio every year. I also calculated the ending value of a set amount contributed at the beginning of the time period with no contributions. I wanted to see if there was a difference in stocks or bonds beating the other whether you contributed only at the beginning or contributed every year.

Note: I choose those funds b/c they were in existence in 1988. I suppose I could've also chosen VFSTX or VFIIX, but I figured others could replace the existing returns with the returns for those funds at their leisure.

I also added 1997-present.

- Alec

 

[DblDoc]

One thing certain, the only way to absolutely cut down on your loss potential in a big downdraft is to have a good sized short to intermediate term, high quality, fixed allocation.

The other take home message is to diversify beyond the S & P 500, both domestically and internationally

DD

 

[haha]

The other take home message is to diversify beyond the S & P 500, both domestically and internationally

DD

That is certainly conventional wisdom, but it wouldn't have helped much in this latest smash-up.

Ha

 

[unclemick]

That is certainly conventional wisdom, but it wouldn't have helped much in this latest smash-up.

Ha

Yep - Target 2015 is pretty much theory fresh outta the can but down 25% doesn't make me feel warm and comfy all over. I can play defense ala SEC yield til the cows come home - but I'd rather see the sun come out and the market rise - bargins or no bargins.

The $ dividends are holding up (except for some bank stocks) in my Norwegian widow stocks - but the P/E contraction is worse for me than the S&P.

So the defense is holding - but like many humans I'd rather toss a few touchdowns - speaking portfolio wise.

heh heh heh - Alabama won in OT - expected but I was rootin for the underdog.

 

[DblDoc]

That is certainly conventional wisdom, but it wouldn't have helped much in this latest smash-up.

Ha

True. Hopefully it will help on the way out of this. This has been a good example of how asset correlation can change. Unfortunately a global black swan creates correlation coefficients of closer to 1 for everything...

DD

 

[haha]

True. Hopefully it will help on the way out of this. This has been a good example of how asset correlation can change. Unfortunately a global black swan creates correlation coefficients of closer to 1 for everything...

DD

When the problem is liquidity, which frequently is the case with abrupt market breaks, correlations of any risky assets almost always go toward 1.

Ha