midareff wrote:Your point is very well presented Nisi .. however..... .3% on $250,000 is still $7,500 a year in interest regardless of the decline or reverse bubble taken by investment grade during the market hit. A retiree supplementing their income with the interest proceeds might think there is a difference of some significance.
If you deduct the $10K starting investment and look at the 20.2 year returns you have $23,366.55 vs. $21,443.35, or a return difference of 8.97%. Looking at the return portion of the investment the return on IG was 5.4% larger. If the investment is $10K it might not be much, if the investment is larger the results can look significantly different.
Had you used that nasty little notch as a buying opportunity your return todate on that $10K investment would have been $6,207.56 vs. $2,896.89 .. (M*'s numbers, not mine). ... hindsight is such a wonderful thing.
Islander wrote:Am still struggling with this.
Since the difference in nominal rates of treasuries and corporates of the same maturity is greater than 0.3%, is not the M* chart and its results
simply an abberation due to the 20+ year bull market in treasuries exacerbated by the more recent flight to the safety of treasuries. Looking forward with
the end of the treasury bull market in sight, if not here, I would expect to see a much different chart.
midareff wrote:Nisi's data in the M* chart is based on a $10K investment. If you take the return amounts less the investment amount a different set of return percentages are present. While the return differences on a $10K investment over 20 years is not large it is very different on a $250K investment.
Got it now?
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