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I don't have any exposure to bonds. Right now I am 100% equities, and plan to stay that way for ten or so years, at which point I'll begin to move gradually into bonds.
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Originally Posted by mathjak107
correct , bonds did excellent but the discussion was about the stock market segment which did not. this really is not a discussion about whether to invest in equities or not. owning pieces of some of the greatest companies on the planet is a given.
the only debate is what kind of returns should someone project forward with if they are saving for retirement and want a ballpark as to where they may be down the road.
bill bengan's work as well as the trinity study adjusted for inflation and goes back to 1926 . no retiree ever would have been broke in any rolling 30 year time frame or longer using 100% equities.
I'm not sure what you mean by "no retiree ever would have been broke", but if you were expecting 7% returns and only got 2% that is going to have a dramatic impact on the amount you have to retire on. But I like how the horizon has been extended from 15 to 30.....
But, once again, the past is no guarantee of the future. Its strange that you guys have such strong faith in the past repeating itself.
I'm also not sure what you mean by "bonds failed". What did they fail? You can't determine risk by looking into the past.
Why? Never in the 146 history of the markets have periods repeated themselves, there have been some good 2~3 decade runs and some pretty bad 2~3 decade runs. The fact that the markets have, over 100+ years, produced gains is irrelevant to an individual who will be investing over 3~4 decades and there is no reason the next 100 years has to look like the past 100 years.
But you can take whatever chance you want, just don't pretend as if you're not speculating. You are.
This depends on the time period, back in 2007 or so CD rates were around 5%. If you did a 10 year CD at that time you would have done well. But you need to adjust returns for risk, CDs provide great risk adjusted return.
so lets see if we have this straight . in nominal terms here we have an asset class, equities which has never lost money in any 15 year time frame or longer over 146 years . i have no data on any losses in real returns so if you do post them.
so we have this asset that never lost money over 15 years or more AND THAT IS THE GAMBLE ?
while speculating that off in the future the results may be different from ever before IN HISTORY AND THATS NOT A GAMBLE!
I'm not sure what you mean by "no retiree ever would have been broke", but if you were expecting 7% returns and only got 2% that is going to have a dramatic impact on the amount you have to retire on. But I like how the horizon has been extended from 15 to 30.....
But, once again, the past is no guarantee of the future. Its strange that you guys have such strong faith in the past repeating itself.
I'm also not sure what you mean by "bonds failed". What did they fail? You can't determine risk by looking into the past.
YES it would have a difference but you were not arguing returns you were arguing about stocks in general being a gamble . my opinion is they to date have been the safest investment long term because nothing has continually been up every 15 years like clockwork. whether in nominal terms or real terms it has still been the safest investment.
return wise i am in another camp . i think we are looking at lower returns then folks plan around going forward. different issue then talking about stocks as a win or lose gamble.
my opinion is in line with many of the reserchers who see about a 5-6% return from equities as about the max for planning around. if we get better great ,i hope we do.
Last edited by mathjak107; 07-06-2014 at 02:39 PM..
I'm not sure what you mean by "no retiree ever would have been broke", but if you were expecting 7% returns and only got 2% that is going to have a dramatic impact on the amount you have to retire on. But I like how the horizon has been extended from 15 to 30.....
But, once again, the past is no guarantee of the future. Its strange that you guys have such strong faith in the past repeating itself.
I'm also not sure what you mean by "bonds failed". What did they fail? You can't determine risk by looking into the past.
well actually you can determine risk by looking in to the past. basically think of it as building a house here in long island.
if you build to construction standards post sandy you can pretty much withstand all the worst the past has thrown at us. you know what failed in most storms of the past . you know what construction techniques worked and what didn't work.
so while you can't predict a storm bigger than sandy you certainly can rule out what failed to stand up in the past.
we already know cash and bonds long term have mostly done poorly, we know stocks have always done well long term.
the odds say if you go with what failed more often in the past there is a pretty high chance they may fail more often in the future as well.
do you rule out owning any ? no of course not, you diversify in to assets whether you believe they will go up or down but by the same token you would be foolish to not own equities as well.
long term , until proven otherwise bonds/cash have a higher risk of negative returns or running out of money utilizing them as an investment in retirement without equities and equities = less risk of negative returns long term and running out of money in retirement.
Last edited by mathjak107; 07-06-2014 at 02:48 PM..
so lets see if we have this straight . in nominal terms here we have an asset class, equities which has never lost money in any 15 year time frame or longer over 146 years .
As I pointed out before, this is only true if you ignore inflation. If you adjust for inflation there are a number of 15 year periods where equities have lost value. Evaluating gains in isolation of inflation makes little sense.
Quote:
Originally Posted by mathjak107
so we have this asset that never lost money over 15 years or more AND THAT IS THE GAMBLE
Right, there is absolutely no reason why equities will perform in the future as they have in the past and investing based on that assumption is a gamble. But, once again, the average returns over 100 years is irrelevant to the average person. People are investing over a few decades, not a 100 years, and their rate of return is going to depend greatly on their particular entry and exit points.
As I pointed out before, this is only true if you ignore inflation. If you adjust for inflation there are a number of 15 year periods where equities have lost value. Evaluating gains in isolation of inflation makes little sense.
Right, there is absolutely no reason why equities will perform in the future as they have in the past and investing based on that assumption is a gamble. But, once again, the average returns over 100 years is irrelevant to the average person. People are investing over a few decades, not a 100 years, and their rate of return is going to depend greatly on their particular entry and exit points.
Either post real rates of return for all other assets classes or stop bringing up real rates of return because you have to be aware that is all other asset classes under performed equities before accounting for inflation the same would hold true adjusted for inflation
As I pointed out before, this is only true if you ignore inflation. If you adjust for inflation there are a number of 15 year periods where equities have lost value. Evaluating gains in isolation of inflation makes little sense.
Right, there is absolutely no reason why equities will perform in the future as they have in the past and investing based on that assumption is a gamble. But, once again, the average returns over 100 years is irrelevant to the average person. People are investing over a few decades, not a 100 years, and their rate of return is going to depend greatly on their particular entry and exit points.
it is a gamble i would take the risk on. as long as we have no crystal ball and don't know how it will shake out i will go with what was over and over and over rather than think this time is different.
As I pointed out before, this is only true if you ignore inflation. If you adjust for inflation there are a number of 15 year periods where equities have lost value. Evaluating gains in isolation of inflation makes little sense.
Right, there is absolutely no reason why equities will perform in the future as they have in the past and investing based on that assumption is a gamble. But, once again, the average returns over 100 years is irrelevant to the average person. People are investing over a few decades, not a 100 years, and their rate of return is going to depend greatly on their particular entry and exit points.
well you can take any 15 year time frame from any entrance point and any exit point after that 15 year time frame you like and guess what? odds are they are up.
if there are any exceptions i bet you really got to go searching to find the few of them that may exist. certainly 20 years down the road there are zero points in time where you were not up a lot.
personally i could not imagine anyone interested in investing not holding at least some equity position.
most of my investing has been in special situation real estate but that is more an active business then a passive investment so i have owned equities every day of my life for more than 25 years and am still up 1900% on the origonal money i started with and that is with the dead decade. that is following a public newsletter that i took an interest in back then using nothing special fidelity funds.
Last edited by mathjak107; 07-06-2014 at 05:06 PM..
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