Last edited Sat Mar 29, 2025, 02:25 AM - Edit history (1)
high valuations, high debt loads and a dozen other factors.
In the meantime, the S&P 500, as measured by VFIAX, the Vanguard S&P 500 index fund, has gone up 5.02 fold from 3/13/2012 to 3/13/2025, a 13.2%/year annualized average rate of return. IOW, it's very hard to call tops, but the permabears have been doing it almost continuously throughout market history. Missing out on many doublings and re-doublings for fear of a TEMPORARY 50% or so drop.
https://www.morningstar.com/funds/xnas/vfiax/chart
(click on the the table icon just to the right of the start date, end date, frequency pulldowns to see the actual numbers, so that one doesn't have to try to read numbers from the graph -- they pop up on the graph where one hovers their mouse, but still its hard to position the mouse cursor).
(It's grown 3.64-fold, a 12.5%/year annualized average rate of return, since 3/13/2014 when the "it's a bubble, it's a bubble, it's a casino" chorus was really growing loud around here).
To see S&P 500 performance long term, alongside bonds and T-bills, see http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html
(at the moment, 3/13/25 close, the S&P 500 is down 6.1% from that last (12/31/24) closing value)
I'll have to admit that the permabears have a very convincing case rhetorically -- when the market is going up, they say "its a bubble, its a bubble". Then when it goes down, they say, "see I told you so". They are never wrong, but the problem is that they don't have much to supplement their Social Security when they retire and deplete their nest eggs much sooner than long-term equity investors.
Innumerable simulations of different allocation percentages have shown that high equity allocation portfolios (but not 100%) have the lowest risk of running out in the face of withdrawals and inflation over long retirement periods (e.g. withdrawing 4% in the first year of retirement, and increasing the dollar amount withdrawals at the rate of inflation in subsequent years) .
Edited to add 2 weeks later: A related post: How often do stock market corrections occur (down more than 10% from recent high): Answer: every couple of years on average. It has Trump's first term 16.32% avg annual rate of return. Also will over-allocate to equities when the market hits 20% down. And that I made the mistake of panicking in 2020 and I learned a lesson: the right equity-to-fixed-income allocation is the one that one can stick with. Numerous simulations in AAII Journal and elsewhere show that a high allocation in stocks does best against inflation and withdrawals. My reply #4 has the 3 biggest S&P 500 post-WWII plunges: 48%, 49%, and 57% S&P 500 peak-to-bottom. Reply #13 clarifies I don't do individual stocks, and that my scheme of buying when the market is down only works with broad-based funds like the S&P 500 index fund or total market index fund, and I would never make such a claim for an individual stock or even a group of 50 stocks , 3/13/25 https://www.democraticunderground.com/111699904#post1
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