Gyroscopic Investing

The attached chart indicates an inflation adjusted return from approx 50K to nearly 350K for US shares in the past 15 years. Could anyone explain to me what caused such a dramatic increase? Has US productivity increased that much?

How much of it is due to the IT sector? Almost all of the well known high-tech companies are traded in the USA, and valuations of these are driven more by narrative of a one-time moonshot (right now AI is supposed to take over the entire economy) than by boring stuff such as corporate profits.

How does it look priced in other currencies inc gold and btc

boglerdude wrote: ↑Tue Mar 12, 2024 8:47 pm How does it look priced in other currencies inc gold and btc

Here's a chart in AUD. With respect to Gold, if you look at the original chart at the top of the thread, it seems as Gold is pretty much a straight line across the bottom compared to the US Total Stock Market. Not sure how to get a chart vs btc.

OK, so according to Harry Browne, Shares out perform during prosperity. Running the Portfolio Visualiser again with Long Term Bonds, it can be seen that the Total Share Market far outperformed the LT Bonds. So for the the USA forum members (or anyone else who wants to comment), did the past 15 years seem very prosperous to you?

Hal wrote: ↑Tue Mar 12, 2024 9:31 am Could anyone explain to me what caused such a dramatic increase? Has US productivity increased that much?

I believe that the Trump tax cuts in late 2017 (TCJA) helped stocks here in the US a lot. This is hardly a thrilling read but might help:

https://www.taxpolicycenter.org/briefin ... table%201).

Cutting taxes from as high as 35% to 21% on companies that are trying to return wealth to investors is bound to make a difference. Of course the pandemic wreaked havoc with financial markets so it was hardly a smooth ride.

Or maybe we are just in another tech-stock bubble. We likely won't know the answer to that for a few more years.

• 50K to 350K over 15 years is 13.85% annualized, right? Is that so dramatic? This is why I’ve always been stock heavy.

• As we know, the market moves in fits and starts, thus “time in the market, not timing the market.” What was that ten-year period where the S&P returned nothing? Maybe 2000 to 2010? That seemed dramatic to me, in a bad way.

Hal wrote: ↑Wed Mar 13, 2024 2:26 amSo for the the USA forum members (or anyone else who wants to comment), did the past 15 years seem very prosperous to you?

• Hell yes. The world (and the U.S.) is always getting better and worse at the same time in my opinion. However, value is being created. Medicine, biotech, software, robotics, agriculture, materials… Is life getting better for the average Joe? That, I don’t know. But prosperity measured in terms of value creation (and not human quality of life) has steadily increased.

dualstow wrote: ↑Wed Mar 13, 2024 7:43 am • 50K to 350K over 15 years is 13.85% annualized, right? Is that so dramatic? This is why I’ve always been stock heavy.

• As we know, the market moves in fits and starts, thus “time in the market, not timing the market.” What was that ten-year period where the S&P returned nothing? Maybe 2000 to 2010? That seemed dramatic to me, in a bad way.

Hal wrote: ↑Wed Mar 13, 2024 2:26 amSo for the the USA forum members (or anyone else who wants to comment), did the past 15 years seem very prosperous to you?

• Hell yes. The world (and the U.S.) is always getting better and worse at the same time in my opinion. However, value is being created. Medicine, biotech, software, robotics, agriculture, materials… Is life getting better for the average Joe? That, I don’t know. But prosperity measured in terms of value creation (and not human quality of life) has steadily increased.

Yes, the lost decade of 2000-2009 was followed by great run for stocks:

https://www.officialdata.org/us/stocks/ ... per%20year.

If you don't want to click on the link, here are the salient numbers:

----

Stock market returns between 2000 and 2023

If you invested $100 in the S&P 500 at the beginning of 2000, you would have about $488.05 at the end of 2023, assuming you reinvested all dividends. This is a return on investment of 388.05%, or 6.93% per year.

This lump-sum investment beats inflation during this period for an inflation-adjusted return of about 175.82% cumulatively, or 4.38% per year.

If you used dollar-cost averaging (monthly) instead of a lump-sum investment, you'd have $530.33.

----

Lots of wealth has been created here in the US in recent years but it's getting more concentrated so the average Joe would probably not feel so prosperous.

I agree to a great extent. However, it’s not about just wealth, but value, Barrett. New treatments for ailments, the democratization of the cellphone, etc.
Granted there are all kinds of problems — surprise medical costs & out-of-pocket health insurance rates; unaffordable housing, and so forth. But I would side with Stephen Pinker, even though I haven’t read the book , that on the whole we’re living better than at anytime in the past.

I guess that is not always related to stocks, but would argue that non-wealth, non-cash_in_hand value is out there.

Of course for those who were lucky enough to be able to hold onto stocks: wealth, too.

dualstow wrote: ↑Wed Mar 13, 2024 1:59 pm
I agree to a great extent. However, it’s not about just wealth, but value, Barrett. New treatments for ailments, the democratization of the cellphone, etc.
Granted there are all kinds of problems — surprise medical costs & out-of-pocket health insurance rates; unaffordable housing, and so forth. But I would side with Stephen Pinker, even though I haven’t read the book , that on the whole we’re living better than at anytime in the past.

I guess that is not always related to stocks, but would argue that non-wealth, non-cash_in_hand value is out there.

Of course for those who were lucky enough to be able to hold onto stocks: wealth, too.

Which is what I have always believed and which is backed up by statistics.

But, of course, does not fit with the "Make America Great Again" crowd, the doomssayers crowd, the things have never been worse crowd, .... and all their anecdotes which do not qualify as statistics.

yankees60 wrote: ↑Wed Mar 13, 2024 5:27 pm

dualstow wrote: ↑Wed Mar 13, 2024 1:59 pm I agree to a great extent. However, it’s not about just wealth, but value, Barrett. New treatments for ailments, the democratization of the cellphone, etc.
Granted there are all kinds of problems — surprise medical costs & out-of-pocket health insurance rates; unaffordable housing, and so forth. But I would side with Stephen Pinker, even though I haven’t read the book , that on the whole we’re living better than at anytime in the past.

I guess that is not always related to stocks, but would argue that non-wealth, non-cash_in_hand value is out there.

Of course for those who were lucky enough to be able to hold onto stocks: wealth, too.

Which is what I have always believed and which is backed up by statistics.

But, of course, does not fit with the "Make America Great Again" crowd, the doomssayers crowd, the things have never been worse crowd, .... and all their anecdotes which do not qualify as statistics.

Excellent point, dualstow, about the distinction between wealth and value. Agree that a lot of what has been "produced" does not show up in the level of the S&P. But I do also think that the growing wealth disparity makes the average Joe feel like he's being left behind. I often think of the point that a friend of mine made years back that in a small poor village, the guy who has a cow when others don't is the rich guy.

But I also agree with Vinny that much of the doom & gloom doesn't necessarily reflect reality, but the gloom is not limited to the MAGA crowd. Much of what the wokesters get so worked up about is manufactured gloom.

I am still partial to value stocks.

Barrett: and the one-eyed man in the country of the blind is king!
Smithers: do you follow Value Stock Geek, featured in another thread?

dualstow wrote: ↑Thu Mar 14, 2024 9:20 am Barrett: and the one-eyed man in the country of the blind is king!
Smithers: do you follow Value Stock Geek, featured in another thread?

I don't, but I definitely will now.

I remember many moons ago, I was a diehard Ben Graham/Warren Buffett disciple reading annual reports and trying to "be like Buffett". This just wasn't practical for lots of reasons. Now I just buy a value stock ETF. Much easier for my lazy butt.

I still look at annual reports, but I don’t kid myself. Index funds for the core, for the bulk of stocks.