diversified portfolios did much better
Ghost of Igloi wrote:
Maserati and agip,
In regards to markets coming back from the dead perhaps a little history is in order: from 1929 to 1949 the stock market as measured by the Dow Industrials averaged about 1% a year including dividends; from 2000 to 2015 the S&P averaged 3.5% a year including dividends. It is true that the stock market has delivered high single or low double digit returns over longer time horizons, but it has also delivered below average returns for significant periods. When one exams high points in the domestic market, measured by a variety of metrics, the tendency is to mean revert to lower returns. One can hold to a theory that the market moves higher while revenues are in decline and investor risk preferences have changed, but it is not supported by the data.
small caps and emerging markets and real estate and gold and bonds didn't have that 2000-2015 slow period - it was just big cap us. So yeah - you can't just own the sp 500 and call it a day.
as for the 1929-1949 period, I suspect the same holds true - that a diversidied portoflio did far, far better. But I don't know.
and anyway, that's cherrypicking again