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I'm not casting off stocks, bonds, real estate, or any asset classes. I would just like to know what YOU guys think the next 30 years will be in relation to stocks?
You can show me 1986 - 2015 charts of the significant growth, are we going to see the same thing from 2016 - 2046 and if so....why and how? The S&P did almost 12% per year (10.4% CAGR per year) over that 1986 - 2015 time period, are we going to see that same 12% from 2016 - 2046?
I'm not casting off stocks, bonds, real estate, or any asset classes. I would just like to know what YOU guys think the next 30 years will be in relation to stocks?
I haven't got the slightest idea; that's the problem. Long-term I expect growth, because I think the global economy is going to continue to grow - but just how much growth, and when over that 30 year interval it will occur, are questions I can't answer.
And that's not just true for stocks; it's true for bonds and real estate as well. Short-term In don't see any big changes, but 30 years down the road, who knows?
I'm not casting off stocks, bonds, real estate, or any asset classes. I would just like to know what YOU guys think the next 30 years will be in relation to stocks?
You can show me 1986 - 2015 charts of the significant growth, are we going to see the same thing from 2016 - 2046 and if so....why and how? The S&P did almost 12% per year (10.4% CAGR per year) over that 1986 - 2015 time period, are we going to see that same 12% from 2016 - 2046?
I want to see some of your comments and analysis.
I doubt we will see anything quite that good. As I'm sure you know, we've had the breeze of declining interest rates at our back since the early 1980s. As interest rates fell, p/e ratios rose. That game is over, oh well. If only we all could have been born a bit earlier.
If interest rates stay very low then today's market is priced reasonably, and possibly even underpriced a bit. If interest rates move back up to something more normal for the current inflation rate (let's say 10-year Tnote at 4% yield) then stocks are a little overpriced. In any event, these are tiny discrepancies in the context of the next 30 years.
The real question is what will we see for GDP growth and the growth of corporate profits. These are the prime movers. All of this nonsense about boomers and their 401ks and such are just noise. Of course, none of us can know for sure how much the economy will grow, but I don't see any reason to expect it will contract or be flat for 30 years. If I can earn even just 6% or 8% that's a lot better than I'll get with any other passive investment.
Today there are plenty of established companies with not outlandish p/e ratios and yields around 2.5% or a bit more. That yield, plus inflation (let's say 2%), plus productivity growth (say 1.5%). That gives us 6%, which is assuming theses companies do nothing very useful with their free cash. Now hopefully some of them will do something better than flushing down the toilet, so let's give ourselves another 1%-2% on top of that 6%. Of course on top of this we have the noise of market valuations. If interest rates go up a lot, or sentiment is sour, that could shave 1%-2%. So here we are back at that 6%-8%. Could it be better? Sure, I'm not assuming that companies in aggregate are doing a great deal with their free cash, but I'm not going to bank on that for myself.
To get those 12%-14% returns that people enjoyed in the 80s and 90s, we'd need to start from lower valuations and higher yields. Let's say starting with 4% yield, 3% inflation, 2% productivity growth, 2% adder for reinvesting free cash, and then another 2% boost from rising pe ratios. That gives us 13%.
Airlines have been absolutely horrible investments. Great trades but horrible investments. Of your list half (Frontier and Atlantic Coast aka ACA) went bankrupt. ACA ceased operations completely.
Since I only held them for around 90 days back in 2001, what happened afterwards didn't much matter to me. And actually Southwest showed up on one of my screens a few years ago when it was in single digits. I started buying some here and there when it was under 10 and got out at around 30 after about 3 or 4 years. So I was happy with that.
You can show me 1986 - 2015 charts of the significant growth, are we going to see the same thing from 2016 - 2046 and if so....why and how? The S&P did almost 12% per year (10.4% CAGR per year) over that 1986 - 2015 time period, are we going to see that same 12% from 2016 - 2046?
John Authers, a commentator in the Financial Times, recently had a piece hypothesizing on the past 30 years vs. the impending 30 years. His assessment, subject to the usual disclaimers, was that we're unlikely to do as well in the next 30, as in the past 30. But this judgment needs to be parsed. The past 30 years were really two distinct periods: the 80s and 90s, and the 21st century thus far. The former was spectacular for stocks, in the US and in Europe. The latter ranged from lackluster to a complete bust.
So, when speculating about the next 30 years, and comparing with the recent past, we should ask ourselves: "which portion of the recent past"? My guess is that we'll do better than we've been doing from 2000 through 2015, but worse than we've been doing from 1985 to 2000. But it's only a guess. Is that good enough?
But there's a deeper question: if not stocks, what else?
Anybody have any predictions? That's what I would like to know. My opinion is that the stock market will still be around, but I just do not see any type of massive growth. We should see major drops about to occur to get back to DOW under 15k, then it will go back up again, crash again, up again, crash again.
I just don't see how we ever see a DOW 20k. I don't see how anybody buying stocks TODAY (literally, today) is going to see any real growth on that money. But financial advisers say nothing about this and just keep pointing to those stupid 100-year-old charts. I want to take those damn charts and burn them.
Why are you sooooo pessimistic? Alex Jones? Goerge Noory? Peter Schiff?
Are people really going to stop buying food, toothpaste, cars, etc? Are mutual fund and 401K managers going to break the law and sell all of the stocks that they manage and sit on cash?
And if you're so fearful of another 2008 then just diversify into bonds.
But there's a deeper question: if not stocks, what else?
Exactly. If I could get 6% from investment-grade bonds I'd put a bunch of my deferred money in bonds, but we're a ways from that. Local real estate for me is not inspiring, and I'm not going to own anything remote. I see gold only as insurance, not an investment.
Of course one can just sit in cash and wait, but no guarantees there either.
if you are young and have the pucker factor to stay the course , bonds are a fix for decreasing volatility in the shorter term temporarily , but it leads to permanently lower returns over the long term .
for those who have no problem with the volatility of stocks in the shorter term using bonds makes little sense when you think of the logic to it .
retirees do not have that kind of time to wait things out so bonds are helpful , but with typical accumulation periods running 30-40 years bonds will hurt more then help since carrying those bonds will permanently reduce long term returns while providing relief from a a temporary event .. .
I'm curious as to why you think we won't see any growth. Do you think the GDP will remain the same over the next 30 years? Has technology peaked? Are there no more productivity gains to be had? Is the population going to level out? Have we reached the end of innovation?
We can't have a healthy discussion 30 years from now as half of the posters today would be dead already by that time; or perhaps reincarnated into babies to start life anew. Everybody goes back to zero savings.
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