How much of your income are you investing?

[throway134]

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Why do you think 7% is conservative. I think it’s exceptionally ambitious to think that you’ll get a 7% return in the next decade based on where the market is .


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We are historically at some of the highest valuations in the history of the stock market. Based on where the cape ratio sits today and where valuations sit, minimal returns are likely for the next decade. And this is based on 100 years of data.

Current cape ratio Is below


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The next decade doesn’t really matter unless that’s when you’re taking out the money. The historical (real not nominal) return is around 6.5%, and is what I usually base my expected outcomes on, but I usually factor in 2-3% uncertainty.

I believe in predictions re: the stock market about as much as I believe in horoscopes.

I only take my direction from ms Cleo. And I am happy I am now in a job I can work till I die

 

[cyanide12345678]

I agree that the market may not have a ton of juice.. that being said it was either 1-2 years ago that Bill Bernstein and WCI said to expect under 5% returns (or something) yet the Sp500 has given us 20+% returns the past 2 years.. Thats almost 8 years of returns based on their guess.

I say all this to say 2 things..

1) no one knows what will happen.. keep firing.. We are entering a new world.. Crypto, AI, Quantum computing, also while the US market has been on fire, international has not.. So maybe its a matter of where you put your money.. but in the end create an investment plan, stick to it and reassess infrequently. Perhaps increased productivity, less govt waste, lower taxes, higher consumer spending (all may ba pipe dream).

2) I agree with everyone on here who is bearish. It all makes no sense.. my move though.. keep loading up where I can.. the market will be higher in 15 years than it is today.. in 15 years I'm likely retired. No one can time or guess the market.

Irrationality can go on and on for some time. Eventually a 30-50% drop might happen to reset things. When that happens, who knows.

THe irrational exuberence lasted for several years in the dot com boom before the reset took place and QQQ took a decade to go back to where it used to be. Facts are facts - people are paying 30x earnings right now on average for the sp500. This is HIGH.

Even real estate with it's 5-7 cap rate is better priced than the 30x (3.33 cap rate) earnings of sp500.

I'll keep doing my strategy but if I was in my 50-60s, I'd be anxious to diversify out of the US.

 

[cyanide12345678]

The next decade doesn’t really matter unless that’s when you’re taking out the money. The historical (real not nominal) return is around 6.5%, and is what I usually base my expected outcomes on, but I usually factor in 2-3% uncertainty.

I believe in predictions re: the stock market about as much as I believe in horoscopes.

I only take my direction from ms Cleo. And I am happy I am now in a job I can work till I die

I agree the next decade only matters if you're taking money out.

But I can only comfortably make a statement what the data supports. Shillers P/E ratio (cape) ratio has very accurately predicted forward looking returns over the next 10 year period over the last 100 years. So that's what the data supports - assuming future performance indeed follows past returns.

Is now different? I dont know. Usually it never is.

 

[RustedFox]

The next decade doesn’t really matter unless that’s when you’re taking out the money. The historical (real not nominal) return is around 6.5%, and is what I usually base my expected outcomes on, but I usually factor in 2-3% uncertainty.

I believe in predictions re: the stock market about as much as I believe in horoscopes.

I only take my direction from ms Cleo. And I am happy I am now in a job I can work till I die

You're out of EM?!
God be praised; good for you! 😉

 

[xaelia]

You're out of EM?!
God be praised; good for you! 😉

My out-of-the-country EM is very easy to work until late 50s or 60s – no nights!

 

[throway134]

You're out of EM?!
God be praised; good for you! 😉

Correct, I am happily now just a poser.

 

[EctopicFetus]

Irrationality can go on and on for some time. Eventually a 30-50% drop might happen to reset things. When that happens, who knows.

THe irrational exuberence lasted for several years in the dot com boom before the reset took place and QQQ took a decade to go back to where it used to be. Facts are facts - people are paying 30x earnings right now on average for the sp500. This is HIGH.

Even real estate with it's 5-7 cap rate is better priced than the 30x (3.33 cap rate) earnings of sp500.

I'll keep doing my strategy but if I was in my 50-60s, I'd be anxious to diversify out of the US.

The thing is.. lets assume you read WCI and went extreme and went all cash in Jan 2023 the sp500 is up 40-45% in that time. The bonds or cash returned 5-6% (maybe). You will never recover that. If the market has another 2-3 years of 10% returns while you sit on the sidelines.. the issue isnt the math or regression to the mean but rather timing it. My long term plan is to have 2 years of cash on hand or bonds, laddered cds, dividend kings etc when i retire. This will prevent me having to sell low.

If the market rages then maybe that number will go up. To be fair i plan to have way way more than i need or plan to spend so i dont worry much about it. I am young enough where i have yet to focus on withdrawal strategies and save fiendishly now to minimize my tax burden.

 

[Emapp20177]

My out-of-the-country EM is very easy to work until late 50s or 60s – no nights!

which country?

 

[Janders]

which country?

NZ
Looking better by the day