clifp
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In the long run young investors will be rich.
- Thread starter clifp
- Start date
REWahoo
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Oh, please.
How can you deny the irrefutable signs financial disaster is just around the corner? Why waste our time with a long-term perspective when we can't possibly survive the next few months? How dare you post FACTS!
Where's a moderator when you need one...
Sarah in SC
Moderator Emeritus
Great stuff! Thanks Clif.
traineeinvestor
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yeah, one investor's experience over the last 61 years isn't that meaningful in the context of a X thousand years of human economic activity and a population which is counted in the millions - definitely a case of recency bias and small sample size
HFWR
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ERD50
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
It would be interesting to see a spreadsheet showing what a 23 YO would have at 60 if they invested some % of salary each year. That would capture the DCA effects. Maybe even do some age-based AA adjustment near retirement.
I do believe that global competition is putting us in a stage that is different from the past 150 years. That doesn't necessarily mean doom and gloom, but regardless, someone investing is likely to do better than someone who doesn't.
-ERD50
I do believe that global competition is putting us in a stage that is different from the past 150 years. That doesn't necessarily mean doom and gloom, but regardless, someone investing is likely to do better than someone who doesn't.
-ERD50
kumquat
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Doesn't Firecalc do that?
rescueme
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Taylor continues to reference the past, and I understand since he's in his late 80's.
However, today is different (as it has always been) from what came before.
Do I know what the future holds (in returns)? Of course not - and I doubt anybody who is not making a dollar from a forecast newsletter/article would disagree with me.
As for me (as an investor, since 1982)? I don't live in the past, but invest for the current/future as I see fit.
Some years I'm up - some years I'm down. What really counts is that I have more up, than down years (and the total return over the long term is positive).
I don't count on the past to direct me toward my/DW's financial future.
Just my simple POV.
However, today is different (as it has always been) from what came before.
Do I know what the future holds (in returns)? Of course not - and I doubt anybody who is not making a dollar from a forecast newsletter/article would disagree with me.
As for me (as an investor, since 1982)? I don't live in the past, but invest for the current/future as I see fit.
Some years I'm up - some years I'm down. What really counts is that I have more up, than down years (and the total return over the long term is positive).
I don't count on the past to direct me toward my/DW's financial future.
Just my simple POV.
REWahoo
Give me a museum and I'll fill it. (Picasso) Give
I'm continually amazed at the pearls of wisdom found on this board...
ERD50
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I never tried the "not retired yet" scenarios, I suppose that would do it...maybe? I don't think it would model increasing your savings, assuming your salary had some average 'real' increase over inflation. Offhand, I don't think FIRECALC offers that level of detail.
I'm continually amazed at the pearls of wisdom found on this board...ERD50 said:
heh-heh-heh, pretty deep thinking, no?
But yet, it does seem to evade so many!But a bit more seriously, I wonder - if one of those scenarios showed you saved and scrimped and the market left you with almost zero gain, maybe fast cars, young women, and old whiskey would have been a better investment from the economic view also?
-ERD50
REWahoo
Give me a museum and I'll fill it. (Picasso) Give
I suppose it all depends on how you define the term "do better".
And if you picked the 'wrong market' or were born at the 'wrong time'?
Nikkei 225 (Year opening price)
1984 - 9,927
1985 - 11,543
1986 - 13,054
1987 - 18,703
1988 - 21,551
1989 - 30,166
1990 - 38,922
1991 - 23,827
1992 - 23,031
1993 - 16,980
1994 - 17,422
1995 - 19,725
1996 - 19,946
1997 - 19,364
1998 - 15,269
1999 - 13,779
2000 - 18,937
2001 - 13,898
2002 - 10,631
2003 - 8,669
2004 - 10,787
2005 - 11,458
2006 - 16,294
2007 - 17,322
2008 - 15,155
2009 - 8,991
2010 - 10,609
2011 - 10,352
How did US returns 1880-1940 compare to 1950-2010?
A lot of this is luck and beyond our control. Maybe we'll get lucky in the stock market. Maybe we won't. So far the odds of broad index funds have been better than playing the lottery at least.
Nikkei 225 (Year opening price)
1984 - 9,927
1985 - 11,543
1986 - 13,054
1987 - 18,703
1988 - 21,551
1989 - 30,166
1990 - 38,922
1991 - 23,827
1992 - 23,031
1993 - 16,980
1994 - 17,422
1995 - 19,725
1996 - 19,946
1997 - 19,364
1998 - 15,269
1999 - 13,779
2000 - 18,937
2001 - 13,898
2002 - 10,631
2003 - 8,669
2004 - 10,787
2005 - 11,458
2006 - 16,294
2007 - 17,322
2008 - 15,155
2009 - 8,991
2010 - 10,609
2011 - 10,352
How did US returns 1880-1940 compare to 1950-2010?
A lot of this is luck and beyond our control. Maybe we'll get lucky in the stock market. Maybe we won't. So far the odds of broad index funds have been better than playing the lottery at least.
obgyn65
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You have not mentioned the federal intervention from 2008 to stabilize the financial markets. Without this intervention, the S&P and others would be much lower.
youbet
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Do better at what?
youbet
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
It's very possible........ And I'm hedging my bets! Just yesterday I enjoyed a shot of Jameson's along with my Guinness at the Tilted Kilt in Roselle. That took care of the old whiskey and young women part. Sadly I drove there in a 1996 Sable that needs a bit of work...... hardly a "fast car." I need to do something about that in the interest of "diversification" I guess.
Exactly. Somebody who's 85 now had the incredibly good fortune to be investing during the biggest boom in US history. One could easily argue him giving investing advice is a bit like a lottery winner saying "it worked great for me, so I'm sure you'll win too if you just buy a ticket."
I know "it's different this time" gets laughed off the board, but ask the people in Japan how different it's been for them. Ask how it's likely to be different when (not if) the US$ loses its "world reserve currency" status. Ask how it might be different when the US deficit jumps by an order of magnitude in two years, with no end in sight. Consider how the US will pay off those debts when its credit rating gets downgraded and its interest costs mushroom. These are things that could have dramatic impact on market returns, and that for the most part have not happened before.
Just because the markets have acted consistently for our lifetimes doesn't mean it's a law of nature. It's not guaranteed to do that forever.
REWahoo
Give me a museum and I'll fill it. (Picasso) Give
Doom and gloom is always in fashion. And we're all doomed. Really.
REWahoo
Give me a museum and I'll fill it. (Picasso) Give
And you have not mentioned the near miss by that asteroid last year. Had it hit, the S&P would have been totally wiped out.
youbet
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
The issue is finding something you can do about it. I haven't thought of anything so I just try to live a prudent life while enjoying myself and understanding that diminishing supplies of natural resources coupled with population growth is going to mean reduced standards of living on earth in the decades ahead.
DblDoc
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Wow. Bummer. And this thread had such a great start...
If you want to feel gloomier go read Bernstein's "Retirement from Hell Series" http://www.early-retirement.org/for...ment-calculator-from-hell-articles-32828.html
Any actionable advice to dodge these end-of-the-US as we know it predictions? If not I guess I'll stick to a diversified AA that includes 50% non-US equities...
DD
OP
OP
clifp
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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Gary I've made plenty of doom and gloom post recently. Just of the top of my head. I've warned about money market breaking the buck, title insurance companies not being able to pay of title claims in the event of massive mortgage foreclosure lawsuits. Any time somebody claims the US government bonds are 100% safe, I remind people that historically the US is in a minority of countries that haven't defaulted on their sovereign debt (yet!). I think that insurance guaranty provide very little protection of annuity holders in general. I particular am skeptical of insurance companies ability to pay off Equity Index Annuity owners in the event of a long bear market.
Plus don't get me started on the massive troubles with public pension, I've been bitching about that long before it became popular.
Most importantly, I think all asset classes are between slightly overvalued (stocks) to really overvalued (government bonds) which makes investing in the environment really challenging. In short I am no Pollyanna.
I also think it is more likely than not that investing the equity returns of the next 60 years will be worse than the last 60 years. Still I think there is a lot of wisdom in what Taylor from the Boglehead is saying. There is always bad news which makes it scary to invest in the stock market.
But betting on capitalism and the US economy has been a fantastic way to get rich. I still say that person consistently putting money into the market when they are young, is the easiest way of person becoming comfortable if not rich when they are old.
kumquat
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chinaco
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For those of us that probably do not have 60 years and are in the draw-down phase...Timing is everything (speaking in the longer view).
The historical charts seem to show pattern of secular bull markets and them some sideways cyclical action. These patterns (historically) seem to last for 15 - 20 years (at least that is what it looks like to me)
We seem to be in a sideways pattern (bubble/bust) for the last 11 years.
Do you think we will be in this type of market for another 4 years or a decade?
America seems to be able to reorient itself better than most other countries. I am confident that we will do it again.
The historical charts seem to show pattern of secular bull markets and them some sideways cyclical action. These patterns (historically) seem to last for 15 - 20 years (at least that is what it looks like to me)
We seem to be in a sideways pattern (bubble/bust) for the last 11 years.
Do you think we will be in this type of market for another 4 years or a decade?
America seems to be able to reorient itself better than most other countries. I am confident that we will do it again.
rescueme
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Yes
...
ronocnikral
Full time employment: Posting here.
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My question exactly. I am sticking to my plan as well. If the markets crash, we're all screwed (whether you drink the stock market "kool-aid" or not) and I have yet to be presented with a better alternative for my hard earned green backs.
In the mean time, I plan to top off my Roth IRA contribution for the year this week and look forward to a long weekend with my sister in Denver.
An aside: no one mentioned the end of the world is right around the corner?
