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LeT
RE: Down goes the Dow

Ghost of Igloi wrote:

OK, smarty let's see your numbers for any time period you like.


I would respectfully suggest that the use of terms like 'smarty' and 'sweetie' is not helpful to any discussion.

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Now, since you insisted on me producing numbers after failing to provide anything to back up your claim I do so here.

As I said, this is all a very simple calculation and can be done in public where anyone can check for errors. So, here I provide my source for raw numbers:

http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

As I mentioned earlier I am looking at reasonably broad market indices over as long of a time period as I can get my hands on. In this case you can see by clicking on the link we have a data set from 1928 through 2014 inclusive. Stocks are represented by the S&P 500. Bonds by the 10-year T-Bond.

I look at rolling 20-year periods, the first of which is 1928 - 1947, the last of which is 1995 - 2014. This provides us with 68 such 20-year periods.

Here are some statistics for you:

1) The number of times that a 90% stock - 10% bond portfolio (hereinafter referred to as the 10% bond portfolio) outperformed the 100% stock portfolio is 8. The number of times that the 100% stock portfolio outperformed is 60 (out of 68).

2) The largest performance advantage over any 20-year period for the 10% bond portfolio is 23.4%. That is, the cumulative percentage point advantage was 23.4% (422% total gain vs 398.6 total gain).

3) The largest performance advantage over any 20-year period for the 100% stock portfolio was 450% (2,082.7% total gain vs 1,632.7% total gain).

4) In 43 out of the 68 20-year periods the 100% stock portfolio enjoyed an advantage greater than the greatest advantage enjoyed in any 20-year period by the 10% bond portfolio.

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I shall await your admission of error.

More importantly I will hope (perhaps against all odds) that you will now cease and desist your practice of spreading false information on this particular topic.

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