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Post by Deleted on Dec 22, 2013 10:37:44 GMT -5
i think it is amazing that they have ANY data for the older time periods. True that! And calculating indices before calculators and computers must have been intense! Sorry for opening my nerd box, I just really wanted to scratch around because of the immense time frame. I will be bookmarking this chart; I've got another 35 years to retirement age and then beyond, so I'd love to watch how this develops too. My style is to hold on tight but "why?" is my eternal question. I like economics and markets because I can ask that question all day, and probably never get a sure answer I do think the chart itself has a lot of merit and was an impressive piece of work, but I do question the chart's accuracy for forecasting a little, because 39% of it used a different company's indices, 61% of its data that isn't the S&P 500 as we know it today, and the S&P 500 itself seems somewhat shifting in computations and company criteria when I looked into it. On the other hand, looking further Shiller and colleagues got the 2013 Nobel Prize in economics, and I'm mostly self taught. Thus, waiting and watching, with popcorn!
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djAdvocate
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Post by djAdvocate on Dec 22, 2013 12:00:53 GMT -5
i think it is amazing that they have ANY data for the older time periods. True that! And calculating indices before calculators and computers must have been intense! Sorry for opening my nerd box, I just really wanted to scratch around because of the immense time frame. I will be bookmarking this chart; I've got another 35 years to retirement age and then beyond, so I'd love to watch how this develops too. My style is to hold on tight but "why?" is my eternal question. I like economics and markets because I can ask that question all day, and probably never get a sure answer I do think the chart itself has a lot of merit and was an impressive piece of work, but I do question the chart's accuracy for forecasting a little, because 39% of it used a different company's indices, 61% of its data that isn't the S&P 500 as we know it today, and the S&P 500 itself seems somewhat shifting in computations and company criteria when I looked into it. On the other hand, looking further Shiller and colleagues got the 2013 Nobel Prize in economics, and I'm mostly self taught. Thus, waiting and watching, with popcorn! no, that is a plausible explanation for why there is a knee in the curve. the question then becomes: what is the "correct" data, in terms of computing averages and forecasting. i am inclined to believe the newer data- but it still seems really high to me.
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djAdvocate
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Post by djAdvocate on Dec 22, 2013 12:05:12 GMT -5
I wish I could figure out how to post charts. When I found historical S&P 500 data it showed what I remembered, huge sawtooth patterns, 2 and 1/2 between roughly 1980 and today. To my eye it looks like we are on the upper sawtooth trend and will have the swing downward soon. I'm not sure where Phil gets his 11.65% numbers from 1982 to the present, that is the REAL returns since 1982 of the SP500.but that can only work if you are buying on dollar cost averaging since the top of the sawtooth broached the middle 1500s twice in that period than tanked downward to roughly 800 and possibly lower. (Going off memory.) For peole like me who find employers tend to hire them and lay them off every two to three years, dollar cost averaging doesn't work well. Plus its complicated by waiting to qualify for 401K plans, being forced into buying company stock for the match that loses value, etc. If you buy only sporadically, the S&P 500 can be a very bad bet. I remember in 2000, my coworkers expected to see the S&P in the 1700s in the near future. Apparently we finally sawtoothed our way there for the first time this year. timing is easy in a secular bull. anyone buying between 1982 and 2000 could literally have thrown a dart at the paper and bought that stock, and probably had an 80% chance of getting above average returns. during that period, i just bought mutual funds. no point in individual issues. it is literally not worth a person's time trying to trade around a bull market. secular bear markets like this one are another matter entirely. that is my opinion, of course- one that is not widely shared among the buy and hold community, but it has worked very well for me, so i am unconcerned with what other people think.
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phil5185
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Post by phil5185 on Dec 22, 2013 12:15:20 GMT -5
Thankfulist - I just entered 1982.1 and 2013.10 into the SP500 Political Calculations calculator, the raw value (unadjusted) is 11.65%/yr. That's for a lump sum invested in 1982 and left for 31 yrs. (A factor of 30). But you get roughly the same outcome with DCA, ie investing incrementally (monthly) over a 30 yr period (that's enough time for statistical normalization and averaging to occur).
I don't have a link - but several yrs ago a brokerage pulled some client data together. Clients that shifted funds back & forth to avoid market dips & catch the rises got a 2.5%/yr return for the 23-yr time block. The index 'buy & hold' clients got 14%/yr for the 23 yrs. One statement from clients re-occurs - "I'm waiting for the market to recover so that I can get back in". lol.
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Post by Value Buy on Dec 22, 2013 12:45:02 GMT -5
I disagree with you common man thesis of today not owning stocks.
disagree away:
Table 6a: Concentration of stock ownership in the United States, 2001-2010 Percent of all stock owned: Wealth class 2001 2004 2007 2010 Top 1% 33.5% 36.7% 38.3% 35.0% Next 19% 55.8% 53.9% 52.8% 56.6% Bottom 80% 10.7% 9.4% 8.9% 8.4%
www2.ucsc.edu/whorulesamerica/power/wealth.html
If they are covered by a pension, IRA, 401-K they are participating in the stock markets.
ibid
a predictable reply which misses the point entirely. let me try again: have you had any REAL gains in equities since the bull market ended in 2001?
in answer to your question.......yes. Will I post particulars? No. I would have to go back and dig up my paperwork from 2001 to compare numbers, or rebuild some spreadsheets from historical data. I do not keep records permanently on file on the computer. My moniker describes not only my posting style, but my investment style. I do hold some stocks forever, and reinvest dividends as well as buy more shares on appropriate dips. Dividend re-investment at the lows of 2008 helped garner big gains for me when the markets rebounded. I had shares trading in single digits adding tons of shares to the portfolio that are now trading three and four times higher than at the time I know you are talking about value of an equity over time, but I just look at what my costs are and what the present value of the specific investment is today. My portfolio is up well over six figure range this year alone and I was out of the market early this year due to concerns about the Government here and the Greece/Europe crisis. Will it continue in 2014? Maybe, maybe not. I am looking for a 7 to 10% increase in 2014 I will take it.
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Post by Deleted on Dec 22, 2013 16:36:26 GMT -5
timing is easy in a secular bull. anyone buying between 1982 and 2000 could literally have thrown a dart at the paper and bought that stock, and probably had an 80% chance of getting above average returns. during that period, i just bought mutual funds. no point in individual issues. it is literally not worth a person's time trying to trade around a bull market. secular bear markets like this one are another matter entirely. that is my opinion, of course- one that is not widely shared among the buy and hold community, but it has worked very well for me, so i am unconcerned with what other people think.Everyone has to do what makes sense and works for them Out of curiosity, you mentioned earlier that you have been doing market times for over 30 years. Would it be impolite of me to ask what your indicators were? I've been through two crashes so far, but mostly what I observed was a certain lead up of psychological indicators that I cast nets and watch for now, out of curiosity. I don't have enough faith in my skills to time though, and just figure it should average out okay. I am interested to see going forward, especially since the S&P 500 is float weighted now instead of capitalization weighted.
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djAdvocate
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Post by djAdvocate on Dec 22, 2013 21:04:11 GMT -5
in answer to your question.......yes. Will I post particulars? No.
i wasn't asking for any. you have done better than the average investor since 2001. congratulations. don't worry about the 11%.
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Post by Deleted on Dec 23, 2013 17:00:34 GMT -5
dang, dj. You are very pessimistic. 10k in 3 years? i think so. give me a minute, and i will go back through my notes. edit: my problem with this market is that it is so far above historical norms. if you look at the log chart in post 1, you will see that the trendline for the market HIGHS is well below the current level for the SP500. this is a 150 year old graph. that means that in the last 150 years, our current market highs have exceeded the predicted highs for over fifteen years, now. it is hard to imagine that we are going to simply cast off 150 years of market history, but even if we ARE to do that, an inflation adjusted number of 1280 would be the new bottom for the market (the old high trend). you may ask: why does it have to be that way? and the answer is: it doesn't. you can sit down at a roulette wheel, put your money on the 00, and win for the rest of your life, theoretically. but you and i both know that the odds favor "regression to the mean". if that were to happen in this case, the SP500 would bottom out at an inflation adjusted 500, not 1280. and, like you, i would call that ludicrous. but that is what the numbers say. therefore, saying that it will bottom out at 1280 seems superficially outrageous, but it really isn't, compared to where history says it "should be". we are way way way way way over normal returns for the last 30 years. i don't honestly know what that "means", but it makes me nervous. could this have anything to do with the way executives are paid now? stock options become so much more valuable as the stock price climbs when that is their motivation, returns are going to be higher something to chew on.....
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djAdvocate
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Post by djAdvocate on Dec 23, 2013 17:36:56 GMT -5
i think so. give me a minute, and i will go back through my notes. edit: my problem with this market is that it is so far above historical norms. if you look at the log chart in post 1, you will see that the trendline for the market HIGHS is well below the current level for the SP500. this is a 150 year old graph. that means that in the last 150 years, our current market highs have exceeded the predicted highs for over fifteen years, now. it is hard to imagine that we are going to simply cast off 150 years of market history, but even if we ARE to do that, an inflation adjusted number of 1280 would be the new bottom for the market (the old high trend). you may ask: why does it have to be that way? and the answer is: it doesn't. you can sit down at a roulette wheel, put your money on the 00, and win for the rest of your life, theoretically. but you and i both know that the odds favor "regression to the mean". if that were to happen in this case, the SP500 would bottom out at an inflation adjusted 500, not 1280. and, like you, i would call that ludicrous. but that is what the numbers say. therefore, saying that it will bottom out at 1280 seems superficially outrageous, but it really isn't, compared to where history says it "should be". we are way way way way way over normal returns for the last 30 years. i don't honestly know what that "means", but it makes me nervous. could this have anything to do with the way executives are paid now? yep.stock options become so much more valuable as the stock price climbs when that is their motivation, returns are going to be higher something to chew on..... no need. i am quite sure that greed is at the root of it.
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