Chief
Related Posts
How is Wunderman Thompson ATL for a creative?
Hi all,
I’m looking to relocate to Seattle. Does anyone know if any of the Big 4 are still recruiting campus hires to start in Summer/Fall 2023? I’m open to either Audit or Tax, but I have internship experience in Tax.
I applied and received an offer at a Big 4 in San Francisco (campus hire), but I’ve decided Seattle is the better fit for me as it will be closer to my hometown and family in Vancouver.
Thanks!
KPMG EY PwC Deloitte
Hi, I'm leaving Citi in 2 months.It's hard to make this decision. I have an offer from a small startup.In citi, my previous experience was not considered and was reskilled to different tech which is the reason for change.I don't like to exit citi. As I like the company so much.But considering my current knowledge,I am in the middle of the sea.I am afraid now that the new company's offer would be revoked due to this recession?Or can I take back my resignation in citi before the last working day.Is this wise decision?
More Posts
Hi everyone! I am looking for the job change having expertise in the stock market as an equity research analyst with 3yrs of experience and currently working at Indore. If any references are there or in the investment banking firms, please help me with that.
Goldman Sachs
Invesco
HSBC India
Best experiential/activation agency?
New here. Henloooo
Will markets jump upwards the day Putin dies?
Additional Posts in Consulting
Top 10 books to read about consulting life ?
New to Fishbowl?
unlock all discussions on Fishbowl.
Hard truth here! But we didn’t have quantitative easing then. It’s rigged game now.
Chief
Okay Silent Generationer
Not the point of your post, but I hardcore judge anyone who uses the term "stonks"
Relax. It was just a joke!
What you're missing is the concept of investing consistently over time. You'd likely always make money if you keep putting a percentage of your wealth into the market every single year.
Don’t forget that the alternative is holding cash, which generally loses value to inflation every incremental time period
Actually, none of those account for dividends and dividend reinvestment.
It also assumes a 1 time investment and not regular investments.
So a disciplined investor still made money even back then. Plus, the dowjones isn't really an accurate metric of the stocks market's performance.
Chief
Remember that fee-free brokerage and even index funds didn’t exist then so retail investors were very unlikely compounding their dividends with reinvestment, or at least weren’t doing so optimally.
Of course, those things do exist now, but again I’d point out that a decade straight of real declines is possible, and even investors fitting your definition of discipline would lose in such environments. Plus, these declines often associate with recessions, during which dividends and interest rates and diminished.
Lastly, while I agree the DJIA alone is not “the” stock market, the same pattern is found in the S&P and is, I would assert, close to what a retail investor would have experienced in their personal portfolio unless they were less diversified - and therefore exposed to more risk.
Anyway, I don’t mean to argue that your counterpoint isn’t fair - I am abstracting the argument to make it more digestible. My larger point is that if you lived through periods of constant real decline or stagnation like the ones I describe, I don’t think you’d conclude “actually everything is fine because of dividend reinvestment.” It would be painful.
Well when savings accounts were paying out 10%, likely would have dumped cash there too
Pro
At 10% in bank accounts you would have lost even more than the stock market. Inflation was much higher for many years. Banks also paid minimal interest which why the money market funds grew so rapidly. CDs were also very popular, often laddered so there was a mix of liquidity and improved returns.
So what’s the take away here?
Yes, but we live in an age of economic engineering. I’m trying to find a better illustration, but there’s one out there showing if you invested at the peak before every contraction, you’re still ahead over the long run.
Pro
There are roughly 60 30 year periods from 1929. A new one starts every year.
Using real returns is good, now compare to the alternatives. Bonds and Real Estate are realistically the only alternatives.
You are cherry picking a core bad years.
Since 1929, bull years return 21% and years return -31% in nominal rates. You can't control inflation, only your target amounts and allocations.
“This time is different“
https://youtu.be/rf_f8GV0yYM
7:10
Chief
For those who don’t feel like loading the video, the speaker adds an important nuance - that corrections create buying opportunities for those who place correct bets on undervalued but otherwise healthy companies.
Every other year on average sees a market decline of 10% or more, and every six years sees a 25%+ correction. These can be crises or, if you’re informed and lucky, opportunities.
Does that account for the tax incentives for retirement plan contributions as well?
Good info, thanks
Pro
In high inflation times you need stocks since their earnings are inflation adjusted as companies raise prices. When inflation is a surprise companies eat the costs for a period, but when there are inflation expectations companies build inflation adjustments into contracts and employees get COLA and raises. When inflation us falling you want to move to bonds.
Using cherry picked numbers doesn't help in the discussion.
Pro
We can prove anything with singularly selected facts. People don't make all their investments in a single year. Of course there are single years that are bad years. Do the same calculation with investments in only a 3 year period or anything longer and your numbers change.
This kind of fact sharing implies first that there is a better alternative and that people should do nothing because that one year's investments may not grow faster than inflation.
There are people that saw how bad the market was in 2007 and 2008 and then never invested after that. Can you imagine how horrible their life will be at retirement?
Go do your math again with dividends reinvested and your numbers are wrong and therefore your premise is false.
This is why we don't allow junior staff to data mine without reviewing the hypothesis and results.