What the Jedi masters Don't Show You in Boglehead School

[Grampus Mud]

Holy, wait whole decades to get back to par, Batman!

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[redfish955]

I think this is an interesting time since many of the s&p companies are globalized and a large portion of some of these companies revenue is coming from over seas. China has publicly stated that companies that have previously invested in China will not be targeted by the tariffs because they do not want to deter companies from investing there in the future. I wouldn't be surprised if the companies that have globalized manufacturing plants do really well in this environment. Some companies have done a really good job of keeping technology in China 20 years behind what is available in America and haven't had to deal with IP theft because they will always be one step ahead in technology, manufacturing processes, and ect.

 

[Mman]

i'm fairly certain your misleading graph ignores the effects of reinvested dividends which is massive over time (like 2% per year)

 

[Grampus Mud]

i'm fairly certain your misleading graph ignores the effects of reinvested dividends which is massive over time (like 2% per year)

But typically during those bear stretches the principal investment is being chewed up by inflation. The dividend reinvestment may only mitigate the true losses.

Unfortunately, the tax man only cares about nominal gains. So that blunts the dividend tailwind.

 

[Mman]

But typically during those bear stretches the principal investment is being chewed up by inflation. The dividend reinvestment may only mitigate the true losses.

Unfortunately, the tax man only cares about nominal gains. So that blunts the dividend tailwind.

nobody is arguing the stock market goes only up. I'm pointing out your graph overstates the effect of bear markets and time to recovery. Bear markets are even less of an issue if you include dividend reinvestment and continual investment during the downturn (so those purchases at cheaper prices skyrocket in value during recovery).

And reinvested dividends aren't impacted by taxes nearly as much as you think. In a 401K you aren't paying any taxes year to year on those dividends, nor in an IRA.

And for a point as to how dumb that original graph is, the S&P has doubled since Dec 31, 2000 when you include reinvested dividends yet that graph just says "fuuuck" with a line drawn through there like something bad has happened.

 

[Raryn]

i'm fairly certain your misleading graph ignores the effects of reinvested dividends which is massive over time (like 2% per year)

I was thinking the same thing when I saw it but was too lazy to look up a corrected version. Thanks for confirming.