1/16 Nikkei 225 back to lows of 2001-2005 and 1986. Dang. I thought
stock markets of developed countries were supposed to return more
than a savings account over 22 years!
\_ If you cherry pick your dates, then no it won't. If you cherry
pick the other way you'd be a zillionaire.
\_ i guess we're supposed to wait 40 years?
\_ No, you're supposed to not cherry pick the dates. Or better
yet, just put your money in your piggy bank.
\_ If you are really interested in this topic, I suggest that you
read _Stocks_For_The_Long_Run_ by Siegel. Plenty of developed
countries stock markets have gone all the way to zero, usually
after they lost a war. If you held German stocks from 1933 to
1945, you were pretty unhappy. On the other hand, if you bought
the Nikkei back in 1950, you are still sitting on a very impressive
gain. The Nikkei is *still* not back to where it was in 1989, so
yes, you can cherry pick dates and demonstrate practically anything.
Diversification and a long term view are essential for success
investing, especially passive investing, like the stock market.
You should not have money in stocks that you need in the next
20 years. -ausman
\_ Guys, conventional wisdom is that you should invest in a market
index and hold x years, and you're virtually guaranteed to do okay.
What is "x" for returns better than a savings account / CD / bonds?
-op
\_ Wrong assumption. The stock market gives you likely better
returns than a more conservative option like a CD, with
a probability curve that starts at x and rises towards 100%
over time. -tom
\_ Also you have to diversify to prevent being really
screwed when one sector/company/country tanks for 20 years.
\_ what do you estimate the probability of a market index
outperforming CDs is for x = 30 years? do you have a sweet
spot for x? let's also assume we are moving from stocks
to bonds/safety as we get older, also as CFPs suggest.
to bonds/safety as we get older, as CFPs suggest.
\_ You could estimate this by looking at historical
30-year returns and seeing how many of those
periods resulted in returns less than 5%/year
average. I expect that probability is very low, less
than 10%. -tom |
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