Tech (AI maybe) probably skews the inflated PE ratios versus modern era norms. Amazon and Microsoft had good days. Meta (Facebook) also had an excellent trading day.
Stock market near new record highs
- Thread starter bdroc
- Start date
Yeah, the growth is centered around that sector which is why it is high. It can stay higher longer than people expect, but someday it will revert to the mean. For now, just enjoy the ride upwards.
You're definitely being selective. The S&P 500 is now up 42% since Inauguration day 2021. The CPI was 261 in January 2021 and was 314 in July 2024 (overall 20% increase). Your suggestion that inflation adjusted returns have been nil is flat out wrong.
For the record I don't believe that CPI is capturing the real increase in cost of living. I don't believe it captures things like increasing insurance costs or the cost of buying a new home. I think the economy is generally good but it's been artificially propped up by exorbitant federal (deficit) spending. I also think the stock market is priced artificially high as evidenced by a PE multiple of 28 vs modern day historical average closer to 20. We can debate those things but it's flat out wrong to say that inflation adjusted returns have been nil over the past 3 1/2 years.
Ask yourself who is being more selective.
1) The guy (me) who has very consistently reported the annualized inflation-adjusted returns of the DOW, S&P, NASDAQ, and the Russell2k or
2) the one that has selected only the best performing index to compare against inflation like you just did?
Listen, I'd would 100% love for the numbers from JAN2021 until now to be better, much better. They simply aren't. The results are the results. And right now the results show that the DOW and NASDAQ are barely positive on an annualized inflation-adjusted basis over the last 3.5 years (less than 2% right now which is pretty terrible historically). They aren't nil as you think that I have claimed (I usually post the exact % at the time, not nil, even if it is only +1%). The S&P is better as you pointed out, for the last 3.5 years it's about half of the historical annualized inflation-adjusted return. The Russell2k is actually fairly strongly negative on an inflation-adjusted basis.
Those four indices tell more of the full story than focusing only on the best performing index that is still only at about half of the annualized inflation-adjusted historical average. Again, I wish the performance was better for all of us. For me, it is a matter of how quickly I get to 8 figure net worth and these 3.5 years have delayed me considerably. But for most people in the market, it is adding years to their retirement date if they even still can.
I think your frustration is misplaced here. It really shouldn't be placed with the guy keeping the running tally of the actual results. I have no impact whatsoever on those results. I simply take the data and report the calculated return. It's like someone trying to lose X lbs and getting mad at the scale. The frustration should be placed with those who have significant influence over the broader market and economic performance. That's not me.
The S&P 500 is more representative of the entire market than the DOW or NASDAQ. But OK, we'll play it your way. The DOW is up 31% and the NASDAQ is up 28%. Both numbers exceed inflation.
Your early posts asked if the markets ever go up. That was silly.
S&P 500 1 yr return: 19.14%
NASDAQ1 yr return: 21.24%
Russell 2000 1 yr return: 14.06%
12-month inflation rate: 3%
As everyone and their momma knows, both market returns and inflation rates spanning the years surrounding the covid crisis were skewed (as was general economic growth). This has been discussed ad nauseum ... and those results aren't indicative of a general economic policy that is relevant going forward.
Just as you had been doing (very openly) on the Current Events board, you are just spewing anti-current administration, pro-former administration propaganda, and you are using convenient time periods to try to push this nonsense.
And you just repeat this misguided information and "analysis" over and over and over and over again.
Be happy that your fake net worth is destroying it again.
I consistently list the results of all 4 indices which is more representative than any single one.
Good day today. We need many, many more like it. The DOW and the NASDAQ are now up between 1 and 2% on an annualized inflation-adjusted basis since JAN2021. Exceeding inflation = barely breaking even (after nearly 4 years!). Exceeding inflation isn't enough. If you risk capital, you have to expect at least a return consistent with the risk-free return plus a reasonable return that correlates to the extent of risk to which you have subjected your capital. If you barely exceed inflation on investments, you will never retire, ever.
The historical annualized inflation-adjusted return for the S&P is about double that since JAN2021. The historical annualized inflation-adjusted return for the DOW and the NASDAQ is 4 to 5 times the performance of those indices since JAN2021. And of course, the Russell2k (small companies) are still deeply in the red on an inflation-adjusted basis since JAN2021. There isn't a way to sugarcoat this. I cannot sell you sunshine and lollipops with these results and if someone is, they don't have your best interests at heart.
Don't get me wrong. It isn't as bad as it was in 2022 when all indices were down massively, and inflation was at 40-year record highs. But that damage of irresponsible fiscal stimulus during a period of rapidly rising inflation cannot be undone. The very high and extended length inflation is now baked in and not just for this 4-year period but really for the rest of your life and it will make everything that you ever buy over 20% more expensive. Because most of the damage occurred before this year, doesn't change that the cumulative damage is pretty severe.
My bigger concern is for those not in the market, whose buying power was reduced by nearly a quarter in just 3.5 years. Sadly, those that are in the toughest positions financially were the worst hurt since JAN2021. Inflation is the most regressive tax there is. Many millions can no longer afford food and housing as we quibble over whether an investment simply beating inflation is good enough. That's the unfortunate reality. It isn't all about you and I. Have a good weekend. We can discuss more later.
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Edwardo longs for the days when GDP was contracting, because THAT'S when Americans had it good, and that's when America was headed in the right direction, in his mind ... and he also longs for the market artificially running upward during that contraction to make a certain 4-year period look good, but helping to cause the monetary policies that followed that necessarily led to higher inflation (which has been well controlled, given the circumstances).
He's a terrible propagandist ... I'm not sure why he tries, and just repeats the same lies and misinformation over and over again. He can't come up with anything new, of course ... because the current picture runs against his narrative.
Instead, the poor guy is left to keep shouting "WE'LL NEVER RECOVER FROM WHAT HAPPENED 3.5 YEARS AGO! Which happens to be the fault of both inevitable circumstances, and the prior administration's decisions to confront those circumstances, but I'll try to hide that and blame it on someone else! IT DOESN'T MATTER HOW GREAT IT IS NOW, UNDER THOSE SAME PEOPLE I MISTAKENLY BLAME FOR THE 'BAD STUFF'!"
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I thought this article was very interesting considering there is some rotation going on right now but also it evaluates various indices at different points in time since end of 2021 thus stripping out the artificiality of the economic collapse during the governor-lead extended covid shutdowns and then the immediate strong rebound that continued until end of 2021. Anyone tying their arguments of economic policy or fiscal policy impact to the period that is the governor-lead extended covid shutdowns or the immediate rebound are definitely not being honest. Everyone knows that 2-year period contained an artificially created economic shock like the world has never seen and then a strong rebound from it.
The article's take is that since July, there has been a big move from the winning stocks of 2023 and early 2024 into mostly small cap laggards and this is true, a good take. But also, when you factor in how horrible 2022 was, the winners really were only covering most of their 2022 losses plus a little.
My additional take on the data provided in the article requires looking at the price changes since end of 2021 when the momentum of the rebound (after governors finally ended their shutdowns) had subsided. Here we get the true sense of the results of the economic and fiscal policy that has been in place the last few years.
Notice that over the last 2.5 years (the last column of data), not one stock index has beat inflation (the NASDAQ-100 and Russell1000 Growth are close to it and the S&P isn't too far off). Sadly, this means that nearly every investor that was in the market has lost buying power over the last 2.5 years on an inflation-adjusted basis.
The article's take is that since July, there has been a big move from the winning stocks of 2023 and early 2024 into mostly small cap laggards and this is true, a good take. But also, when you factor in how horrible 2022 was, the winners really were only covering most of their 2022 losses plus a little.
My additional take on the data provided in the article requires looking at the price changes since end of 2021 when the momentum of the rebound (after governors finally ended their shutdowns) had subsided. Here we get the true sense of the results of the economic and fiscal policy that has been in place the last few years.
Notice that over the last 2.5 years (the last column of data), not one stock index has beat inflation (the NASDAQ-100 and Russell1000 Growth are close to it and the S&P isn't too far off). Sadly, this means that nearly every investor that was in the market has lost buying power over the last 2.5 years on an inflation-adjusted basis.
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EdwardoCarrachio gets so mad when he sees the stock market going up lol.
Now you're measuring from the END of 2021 (2.5 years instead of 3.5 years). You're starting in 2022 when the index was down 18% and excluding 2021 when the index was up 29%.
Reread. I am not measuring from that point. The article has. I posted the article due to the relevant insights it laid out on the stock rotation underway. I did notice in their article, that the last 2.5 years have been very poor by historic standards. Some here want to dishonestly count the covid shutdowns in economic analysis of larger periods. I am merely pointing out that 2020 - 2021 was artificially driven by covid shutdowns and the immediate rebound after reopening. It's dishonest to not consider that.
I will however continue to provide updates that include the full period from 2017 to 2020 and 2021 until now. You don't seem to like those numbers either. The reality is that things were pretty good for a while outperforming historical averages and they have been significantly underperforming the historical averages the last few years. It is what it is. I'd like to get back to outperforming on a longer term. How about you?
NASDAQ has lost almost 10% (8.2% since July 10th) in the last 3 weeks. How much further will it go?
Tech P/E out of whack so there is a correction happening there. Some other sectors doing okay but when big tech falters it impacts the markets.
I saw he commented in here and knew the markets would be down. Totally predictable.
The NASDAQ has pretty much only been down lately, since July 10th. There have been a few up days there and I have commented on some of those days in this thread as well. But you could say that everyone commenting in this thread has almost exclusively commented on days that the NASDAQ has been down.
Pre-market finally looking like a decent bounce for the NASDAQ today. That index has been beaten up badly here this month and could definitely use some love. Small caps up but not as strongly. Wonder if that rotation is done for now?
That’s because this thread is only you trying to make everything look as bad as possible and others trying to talk sense into you when you do. If you actually had any money to invest in the Nasdaq comp, you’d be giddy about making over 19% YTD with historically low inflation.
As I said previously, when EdwardoCarrachio shows up to comment, that’s usually a buy indicator lol.
I should have kept my mouth shut yesterday. Gains are gone. Deep red sea today.
Recession fears are supposedly moving the market. See link below for more. linky
NEW YORK (AP) — Stocks on Wall Street are slumping alongside bond yields on Thursday after more signals suggested the U.S. economy's growth is slowing.
The S&P 500 was down 0.8% in midday trading after weak data on U.S. manufacturing helped extinguish a morning rally of 0.8%. The Dow Jones Industrial Average was down 466 points, or 1.1%, as of 11:15 a.m. Eastern time, and the Nasdaq composite was 1% lower.
The action was even stronger in the bond market, where the yield on the 10-year Treasury yield tumbled below 4%, back to where it was in February. Besides the soft manufacturing data, other reports in the morning showed that the number of U.S. workers applying for jobless benefits hit its highest level in a year and that productivity for U.S. workers improved during the spring.
NEW YORK (AP) — Stocks on Wall Street are slumping alongside bond yields on Thursday after more signals suggested the U.S. economy's growth is slowing.
The S&P 500 was down 0.8% in midday trading after weak data on U.S. manufacturing helped extinguish a morning rally of 0.8%. The Dow Jones Industrial Average was down 466 points, or 1.1%, as of 11:15 a.m. Eastern time, and the Nasdaq composite was 1% lower.
The action was even stronger in the bond market, where the yield on the 10-year Treasury yield tumbled below 4%, back to where it was in February. Besides the soft manufacturing data, other reports in the morning showed that the number of U.S. workers applying for jobless benefits hit its highest level in a year and that productivity for U.S. workers improved during the spring.
Still up 14% YTD
PE on the S&P 500 index is still 27 which is historically high.
Someone explain “recession” to poor Edwardo. Apparently he hasn’t gotten that far in his Personal Finance for Dummies audio book. If he wasn’t such an obvious and consistent troll, I’d feel bad for him.
I'm going to give you the comparison of JAN2021-today against JAN2017-DEC2020 on an annualized inflation-adjusted basis as of today (like 15 minutes ago). Keep in mind the historical average return on an annualized inflation-adjusted basis is around 8% to 10% depending on the index. Let me know how you think we are performing. Please give an honest assessment.
DOW
JAN2021 - TODAY UP 2.65%
JAN2017 - DEC2020 UP 12.03%
NASDAQ
JAN2021 - TODAY UP 1.66%
JAN2017 - DEC2020 UP 32.53% (largest in history for any 4-year period)
S&P
JAN2021 - TODAY UP 5.94%
JAN2017 - DEC2020 UP 14.78%
Russell2k
JAN2021 - TODAY DOWN 5.71%
JAN2017 - DEC2020 UP 13.22%
Calculations below:
Since JAN21 cumulative inflation is 20.1%. (314.175-261.582)/261.582. 7 more months to report this year so it will likely finish about 22% or so for the 4-year period.
The DOW is up 2.65% on an annualized inflation-adjusted basis since JAN2021.
29.4% gain since JAN21 (17059-13543)/13543. That is up 9.3% in those 3.5 years on an inflation-adjusted basis. (29.4%-20.1%) If you annualize this, it is up 2.65% annualized.
The NASDAQ is up 1.66% on an annualized inflation-adjusted basis since JAN2021.
25.9% gain since JAN21 (40113-30997)/30997. That is up 5.8% in those 3.5 years on an inflation-adjusted basis. (25.9%-20.1%) If you annualize this, it is up 1.66% annualized.
The S&P is up 5.94% on an annualized inflation-adjusted basis since JAN2021.
40.9% gain since JAN21 (5414-3841)/3841. That is up 20.8% in those 3.5 years on an inflation-adjusted basis. (40.9%-20.1%) If you annualize this, it is up 5.94% annualized.
The Russell2k is DOWN 5.71% on an annualized inflation-adjusted basis since JAN2021.
0.1% gain since JAN21 (2172-2169)/2169. That is DOWN 20% in those 3.5 years on an inflation-adjusted basis. (0.1%-20.1%) If you annualize this, it is DOWN 5.71% annualized.
Here are the results on an annualized inflation-adjusted basis from JAN2017-DEC2020. DOW up 12.03%, S&P up 14.78%, NASDAQ up 32.53% (largest in history), Russell2k up 13.22%.
Sadly, the premarket looks even worse than yesterday. If this keeps up, soon the DOW, NASDAQ, and Russell2k will all end up in negative territory on an inflation-adjusted basis since JAN2021. If that happens, it would be historically bad. Hopefully it turns around but it's looking very bad at the moment.
I think we all are if this continues.
I don't know that I buy all of the articles on this market move saying recession potentially inbound, but the ISM manufacturing index fell to a 46.8% from 48.5% in June and has been in contractionary territory now for 4 months and the jobless claims came in higher than expected and are now the highest in about a year. There is certainly data painting a declining economic picture and if so, we all lose. That includes those not in stock market but certainly there is high risk right now of further decline in the market.
Again, I hope not. This would not be good for my family or yours.
Edit: Just in the few minutes since I typed this, the unemployment rate (which many no longer trust from the manipulated reports) jumped up to 4.3% in the report released this morning. Still a good number historically but it is showing several months now of rising unemployment. Two of my wife's friends have recently been laid off and they are at ages and stages of a career where it is going to be very difficult to find something comparable. One of her friends went through this a year ago as she was an underwriter of mortgages (that slowed massively with the increased rates) and she ended up accepting a job making half as much for a state government position. Although you can argue that her job is as safe as there are out there now with unemployment rising.
I'm sorry if it bothers you that this stuff affects real people.
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You're a broken record. The DOW is up roughly 33% since January 2021 and the NASDAQ is up roughly 27%. Both are above inflation.
3 years of inflation really sucked and prices aren't likely to come back down. Some items were higher after covid due to shortages as factories took time to ramp back up. That part should have been transitory. Railroad workers, truck drivers, auto workers, nurses, government employees, etc all got historically large pay increases and that's permanently reflected in the prices we pay. Heck, even fast food workers are making $18/hr.
Here's the good news. Let's say you have a $1 million equity portfolio that's up 30%. You've gained $300k. Now let's say you spent $100k per year on living expenses. That number went from $100k to $110k to $120k, to $130k. That's $60k of cumulative inflation which is much less than your investment gains. You're ahead by a whopping $240k!
Here's the bad news. Those without equity didn't realize the $300k gain but they did experience the $60k of inflation. Their only offset would have been wage increases. Some of those people with big new union contracts might be ahead of the game but most people are suffering.
An established investor should be well ahead of the game. I think stock market performance has been great. My concern is how long will it last given the current PE ratio of 27. A lot of earnings growth has already been priced into stocks so I see bigger downside than upside risks at this point. Of course markets have been known to climb a wall of worry for some time.... until they don't. Time will tell.
Your concerns about the future direction of the economy are reasonable (unlike your complaints about the stock market). Manufacturing has been in a slump for some time. The growth has been narrowly focused in technology. Consumer spending remains strong which is a good sign but it's coming at the expense of rising consumer debt which is scary.
The economy and jobs had to weaken in order to slow inflation. The question is if the Fed can manage a soft landing. So far so good but the government hasn't historically been so successful.
I gave you the results as of yesterday and asked for an honest assessment. You gave me some hypothetical situation that reads to me as an excuse.
Please relook the numbers below (I provided the calculations in the post above but will repost the final annualized inflation-adjusted results below) and tell us an honest assessment of the performance. Keep in mind that all of the JAN2021 - Today numbers are a bit lower if the premarket holds up today. Also, for the average worker today to retire at 70% to 80% of their work replacement income, they need to return around 8% for many decades (hopefully starting in their 20s) with investment of at least 13% of their income for retirement, more if they have other goals like funding kids' college, etc.
3 of the 4 indices are in real jeopardy of ending in negative territory for a 4-year period if the market continues to fall like it is now. The historical average for these indices should be in the 8% range on an inflation-adjusted basis for perspective.
DOW
JAN2021 - TODAY UP 2.65%
JAN2017 - DEC2020 UP 12.03%
NASDAQ
JAN2021 - TODAY UP 1.66%
JAN2017 - DEC2020 UP 32.53% (largest in history for any 4-year period)
S&P
JAN2021 - TODAY UP 5.94%
JAN2017 - DEC2020 UP 14.78%
Russell2k
JAN2021 - TODAY DOWN 5.71%
JAN2017 - DEC2020 UP 13.22%
Bottom line, are these good results for either period? What is the impact of these results? Thanks in advance for your honest evaluation. As intellectuals with the ability to analyze data and use logic and reason, we should be able to discuss the results and the impact honestly.
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S&P is up 30% since Jan 2021. Has inflation risen at this rate to negate all the gains of an investor? No way.
Bdgan is correct. A $1 million dollar equity portfolio that grows 30% gains $300,000. Simple math, no denying that.
There is no way your expenses from inflation have cost you $300,000 in net worth. Impossible.
Inflation was:
2021 7%
2022 6.5%
2023 3.4%
2024 3%
You realize no one's expenses equals their equity portfolio amount.
Let's say your expenses are $200,000 a year which is way inflated if you have a million dollar portfolio but use that to skew the numbers as much as could be reasonable in your argument's favor.
That would mean your expenses rose approximately $43,000 since Jan '21.
So you made $300,000 and had inflation related expenses rise $43,000 for a net gain of $257,000 or 25.7% inflation adjusted return on your $1 million portfolio. This is excellent
You must be doing something crazy and assuming the person with a million dollar equity portfolio also has a million in expenses. But even at that ridiculous premise you would have had about a 9% inflation adjusted gain since Jan '21..
That's similar to my math. Inflation has certainly taken it's toll on many but established investors should be well ahead of where they were a few years ago in spite of inflation.
I'll say this in Eduardo's defense. When I go the grocery store I see a lot of things that are 50%-100% higher than what they were a few years ago. Auto insurance is up 20% just this past year. Restaurant lunch menus used to have things priced at $12.99 but now they're $19.99. Heaven forbid you're trying to buy your first home. I don't know how they calculate CPI. I doubt that it's rigged but inflation certainly seems higher than 20%. Of course you might have locked in a 2.7% mortgage 5 years ago so you aren't feeling any feel any real estate inflation.
Yeah, the problem with his scenarios and the calculations behind it are that he is just blindly comparing percentages with no baseline or denominator factored into it.
Look at it this way. Company A sold 1,000 widgets in one year and doubled that to 2,000. Company B sold 1,000 000 widgets and increased that the next year to 1,300,000 widgets or 30% growth. Can you compare the percentage growth 100% vs 30%?
Then he annualized 30% growth so not sure if he is doing a CAGR calc or what and compares it to inflation. So yes in years with extraordinarily high inflation like 7% it is a challenge for the S&P to far exceed that on a pure percentage growth comparison but that is apples to oranges and that is the heart of his argument. That piece along with his politically driven motives of comparing to a pre 2021 time period.
You can make numbers sing any song you want them to if you work at it long enough. How about this....look at Jan '23 to now comparing the markets to inflation. S&P up 28% and inflation up 3%.
I do agree that prices have gotten out of control. Car insurance prices are a joke with how they have increased. You can't go to a decent restaurant and expect to pay much below $30 for an entree and God forbid you want a steak well that will be $50. Want a bag of chips? Try $6.99. So inflation has hurt everyone's pocketbooks but to advocate the premise that it has basically eroded all the gains an investor has made in the market over the last three and a half years is simply incorrect.
Buffet was talking about selling Apple during the annual meeting in May. One reason was that it accounted for nearly 70% of Berkshire's portfolio value. He started buying in 2016 and the shares have been up 800% since then. Another reason is that Biden has proposed substantially raising the capital gains tax rate and eliminating the step up in basis at death. So shareholders might benefit from paying now instead of later.
It looks like I missed a meeting of the liberal arts degrees over the weekend. Let’s recap.
JAN2021 - TODAY UP 2.31%
JAN2017 - DEC2020 UP 12.03%
NASDAQ
JAN2021 - TODAY UP 1.09%
JAN2017 - DEC2020 UP 32.53% (largest in history for any 4-year period)
S&P
JAN2021 - TODAY UP 5.46%
JAN2017 - DEC2020 UP 14.78%
Russell2k
JAN2021 - TODAY DOWN 5.83%
JAN2017 - DEC2020 UP 13.22%
- Before the weekend, I posted the EXACT returns of the stock market and the calculations annualized and inflation-adjusted for the periods JAN2017-DEC2020 and JAN2021 until now. I have recalculated and posted those returns below as of this last trading day of 8/1/2024.
- Annualizing the return allows you to compare periods of different lengths under the same terms. Inflation-adjusted tells you how much the investment and return (at various time periods) can actually purchase.
- I merely ask for an honest comparison of the results to include against the historical average annualized inflation-adjusted return of about 7% to 10% depending on which index you are evaluating. Now this is incredibly straightforward if you have any quantitative reasoning skills. This is 100% the correct way to analyze the return of investments. It gives you the same correct analysis for the return on an investment whether your investment was $1M or $1000.
- Several (I can only assume) liberal arts majors instead come up with a hypothetical that involves having $1M in investment basis. This is 5 times the amount of the median retirement savings for the people in the age group with the highest retirement savings (see median retirement savings by age brackets from the Federal Reserve Board below). Keep in mind that according to yahoo finance this hypothetical person with $1M in retirement savings is in the top 10 percent of all Americans. So they are only working through a hypothetical for the top 10%.
- Now they assume $200k of expenses per year for this top 10% wealthy hypothetical person (why $200k?, well, because they just randomly took that number out of their head just like they for no logical reason chose $1M in investment assets) and somehow calculate that with 20.1% cumulative inflation over 3.5 years (I have already shown this calculation) that this top 10%er only increases their expenses by $43k over 3.5 years. But they can’t even calculate that correctly. I’ll even break this down further for them below (they can grab a someone with a STEM degree to explain this if it is too complex for them).
- 2020: $200k expenses (this is the basis for comparison)
- 2021: $200k expenses times 1.07 = $214k ($14k more than $200k)
- 2022: $200k times 1.07*1.065 (that is how you calculate cumulative inflation for multiple years of inflation) = $228k ($28k more for this year than $200k)
- 2023: $200k times 1.07*1.065*1.034 = $236k ($36k over $200k this year)
- 2024: $200k times 1.07*1065*1.034*1.03 = $243k ($43k over $200k this year)
- So to get the total amount of increased expenses since JAN2021 due to cumulative inflation you have to add $14k+$28k+$36k+$43k = $121k of additional expenses since JAN2021, not $43k as they mistakenly claimed.
- It was $43k of additional expenses in only the last year. So unless they intend to dishonestly compare only one year of increased expenses due to inflation to the total amount of growth of their hypothetical top 10%er’s investment over all of the years, they are only off by nearly 200% in their inflation increased expenses.
- Now, as silly as it is to use a hypothetical situation instead of the actual returns of every index which would apply to every investor of that index regardless of how much they invested and how much they spend, they also chose a hypothetical investment amount that only applies to the top 10% of Americans that are invested in the market and then they randomly choose some number that they guess is a reasonable annual expense for that top 10%er AND THEN USE A CALCULATED INCREASE IN EXPENSES DUE TO INFLATION THAT IS WRONG BY NEARLY 200%.
- So please, don’t hurt your heads. Find someone with a degree in STEM and have them explain this to you slowly so that you can understand how absurd your hypothetical is and that it doesn’t even attempt to compare the JAN2017 – DEC2020 period to the JAN2021 – Now period or to the historical average returns.
- All that you are doing is saying that some made up outlier case that you came up with that has a huge calculation error that none of the other liberal arts grads even realized is good enough for you. It’s not compared against the other period nor is it compared against the historical average. It is about the least logical analysis you could devise and I’m trying to be kind.
- So to the point of this made-up outlier hypothetical of a 10%er with some guestimate of expenses. They actually would have not been up as much as you calculated because you were off by almost 200% in the amount of increased expenses due to inflation and 30% gains in a $1M investment would yield a total amount of in the account that can actually purchase LESS goods and services than it did in JAN2021. $1.3M - $121k in increased expenses due to inflation = $1.179M. That would only purchase ($1.791M/1.201) = $982k worth of goods and services (due to 20.1% cumulative inflation reducing the purchasing power of the new account balance by 20.1%).
JAN2021 - TODAY UP 2.31%
JAN2017 - DEC2020 UP 12.03%
NASDAQ
JAN2021 - TODAY UP 1.09%
JAN2017 - DEC2020 UP 32.53% (largest in history for any 4-year period)
S&P
JAN2021 - TODAY UP 5.46%
JAN2017 - DEC2020 UP 14.78%
Russell2k
JAN2021 - TODAY DOWN 5.83%
JAN2017 - DEC2020 UP 13.22%
Age group | Median retirement savings balance amount |
| Under 35 | $18,880. |
| 35-44 | $45,000. |
| 45-54 | $115,000. |
| 55-64 | $185,000. |
| 65-74 | $200,000. |
| 75 and older | $130,000. |
| Source: Federal Reserve Board |
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You remain a broken record.
- Nobody claimed that 3 years of inflation wasn't a problem.
- Nobody claimed that the average person earned $200k and had a net worth of $1,000,000.
- The economy has been relatively strong as evidenced by GDP growth and the low unemployment rate.
- People with a large investible net worth have come out ahead because their portfolios have grown more than their annual cost of living. Most people with a small investible net worth have suffered because their cost of living has grown more than their portfolio value.
