Guy who says skookum AND asymptotic wrote:
Cherry Pick these
July 1987-The peak before the black Monday 22% crash, and companion bear market to Ocotober 2018. SP 500 with Dividend Reinvestment 9.4 percent. Not double digit perhaps, but pretty damn skookum.
Adjust the completion to December 2018, after our recent 20% correction, and you still get 8.8 percent.
Adjust the initiation to December 1987, and through last October, you get 10.6%.
Going down through the history of the last 60 years.
Reagan Reelection in 1984-11.17%
Reagan was elected- 11.4%.
Carter's election-11.3%
Nixon's resignation-11.7%
Nixon Reelection-10.3%
Nixon's election- 9.9%
Johnson's election-9.8%
Kennedy's murder-10.04%
Kennedy's election-10.18%
This, my friend, is what I call a skookum asymptotic function. Carter was bad for stocks, Reagan was good-yet they've almost got the same returns 40 years later. I've cherry picked nothing--just election results and assassinations and political scandals--Vietnam is in there, September 11 is in there, Carter's malaise is in there, the collapse of US manufacturing is in there---yet it's all pretty much 10% no matter what starting point you choose for the past 60 years-except for periods in the last 20.
Don't know how old you are, but the 1970s was not an era of postwar boom. That pretty much fizzled out after the Tet offensive. I would argue market returns are depressed from the 10% mean over the past 20 years because the "war on terrorism" has been a drag on our economy. Think how much more profitable business travelers could be if they did not waste all that time taking off their shoes and belts at airport check in lines.
This is a moment for optimism. The US is the world's leading producer of petroleum right now--when was the last time that happened? On an inflation adjusted basis, gasoline is as cheap as it's ever been in my lifetime--and we're not kowtowing to OPEC to do it. This is an enormous tailwind to our economy, and stabilizing force in the war against terror.
Ghost of Igloi wrote:
OK, then how do you explain the 3/2000-9/2018 S&P 500 annualized return of 3.851%. That is a high point to a high point. Your belief in double digit annualized equity reurns is a myth. Of course it will work if yo can time travel back to 1880 and project those returns forward. Problem is you will not live that long and the economic potential of this country is nowhere near the post-WW II era.
I you just believe Toto it will make it so.
I am 68 years old. You forgot all the debt that got us here. Besides at any of your starting points there were more makers than takers, all of that has been reversed (SocialSecurity/Medicare). All you have to do is look at historical GDP figures to see the flaw in your assumptions. In regards to oil, we are expprting oil at $60 a barrel only to in the future to import it at $120. Fracking is rapidly depleting any reserves. Nice to be optimistic but to ignore the headwinds facing this country is part of the problem and will never be a solution. In conclusion, I am not against equity investment, I believe fundamentals matter and there is little other than extreme monetary and fiscal policy to support current valuations.Fed policy is the reason this will be the third greater than -50% bear market in a twenty year period. Buckle up.