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Decided to payoff my mortgage.
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Coach
No. I think 5% to 7% is more indicative of “normal” market activity.
Yes I do. Tech is fueling so much growth in America and we’ve only just begun. The companies that are in the top 20 of market cap today won’t be in 30 years. There will be new companies pushing the envelope even further in areas such as automation, green energy, genomics, and other industries we haven’t even considered today.
Growth is inevitable. As long as America remains a capitalistic society with a legal framework that favors big business, the market will continue to tear it up.
We’ve only just begun on what we will look back at as a historic growth cycle.
This dude really gets you jacked up
Mentor
No. But more because 10% is high historically because we haven’t had a long market downturn in a decade.
Agreed, that’s a big eye-opener especially over longer terms. There can be a huge difference between a steady 8% every year and big swings between -20% and +20%.
If I am doing a simple model where I have one growth factor for the whole time series, I will haircut it to 4 or 5% to account for that. More accurate would be to have a separate growth factor for each year.
10% every year? No. Average 7% every year over 30 years? Yes.
7% nominal has been the historical return and, if inflation continues, we will likely have lower real returns until this administration leaves.
Mentor
SA1, that’s an extremely simplistic take that completely ignores long term impacts of a global pandemic and serious contraints on global supply chain. And economic and monetary policy take time to filter through the economy. People have been saying loose monetary policy would lead to rampant inflation for over a decade.
Which policy or policies do you believe contributed to inflation so quickly and so directly in January 2021? Particularly ones that were not already implemented by prior administrations and simply extended by the current one?
Annually every year? No. On average, at least for the next 10.
Over 30, I’m not convinced that one market participation, education, and skill conversion will be strong enough to compete like we have on the world stage. There’ll be a comeuppance for our success by not enabling other countries. We could end up being trounced.
Market 7-8% very conservatively. Individual investments in individual sectors and different asset classes should yield you upwards of 18% yoy if you risk adjust over the years so that the initial years are more aggressive than the later years.
* I have been in the market for the last 25 years and I’m 52 year old now.
Subject Expert
Don’t really trust them, not having kids, etc. 18% seems like a crazy number when you regularly hear that even most professionals don’t beat the market.
I thought it's 10 but say 7% because they are adjusting for inflation