Lower Return Decade Says Jack: Thoughts?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
JustWantToGetItRight
Posts: 138
Joined: Sat Aug 18, 2018 2:18 pm

Lower Return Decade Says Jack: Thoughts?

Post by JustWantToGetItRight » Sun Sep 09, 2018 11:07 am

Just read Jack Bogle's book (edited in 2017) and was a little discouraged about his comments that we should all expect lower returns in the next decade.

For a 60/40 balanced fund it could be as low as 6% and even 4% in some circumstances. Am I misreading? Because if not, Id rather be in CDs and take a small hit on inflation then incur the risk for a few more percentage points.

Please clear this up for me.

Thanks

CarpeDiem22
Posts: 90
Joined: Tue May 22, 2018 11:20 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by CarpeDiem22 » Sun Sep 09, 2018 11:14 am

Yes, lower return is EXPECTED. Actual return could be much higher or much lower. On the other hand, CD would ensure low return.

User avatar
midareff
Posts: 5712
Joined: Mon Nov 29, 2010 10:43 am
Location: Biscayne Bay, South Florida

Re: Lower Return Decade Says Jack: Thoughts?

Post by midareff » Sun Sep 09, 2018 11:16 am

The answer is save enough and retire with enough so you are not dependent on returns for your life style.

Elysium
Posts: 1153
Joined: Mon Apr 02, 2007 6:22 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by Elysium » Sun Sep 09, 2018 11:19 am

If you have enough for your needs, and returns from CD's are good enough to maintain your life style, then there is no need to take equity risk. This is regardless of expected equity returns, which are always risky, and no guarantee what they could be. I think Jack is being more optimistic than some of the others when he attribute 6% returns. We have had a long bull market with returns well above the long term averge, so it is only normal to have a decade of lower returns.

stocknoob4111
Posts: 279
Joined: Sun Jan 07, 2018 12:52 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by stocknoob4111 » Sun Sep 09, 2018 12:46 pm

I posted a very similar question a few days ago, many smart alecs on this forum predicted exactly a 6.47587646% return so you have your answer :D

bradpevans
Posts: 306
Joined: Sun Apr 08, 2018 1:09 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by bradpevans » Sun Sep 09, 2018 12:55 pm

Even if you believe this, there is still the time element: are you already retired? Will you retire in this window? Will you be adding funds every month - thus buying at relatively low values?

wootwoot
Posts: 140
Joined: Tue Jan 27, 2009 7:37 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by wootwoot » Sun Sep 09, 2018 1:01 pm

This prediction has been posted on countless times. Rather than rehashing it again try the search bar.
:sharebeer

EnjoyIt
Posts: 1545
Joined: Sun Dec 29, 2013 8:06 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by EnjoyIt » Sun Sep 09, 2018 1:31 pm

JustWantToGetItRight wrote:
Sun Sep 09, 2018 11:07 am
Just read Jack Bogle's book (edited in 2017) and was a little discouraged about his comments that we should all expect lower returns in the next decade.

For a 60/40 balanced fund it could be as low as 6% and even 4% in some circumstances. Am I misreading? Because if not, Id rather be in CDs and take a small hit on inflation then incur the risk for a few more percentage points.

Please clear this up for me.

Thanks
So far to my knowledge there has never been a single person who has been able to correctly predict market returns. Jack Bogle is a hero for investors but even he does not posses a crystal ball. Either way you only have 1 of two options: Do nothing, or do something. I am choosing to do nothing which I think was another one of Mr. Bogles recommendations.

Ron Scott
Posts: 776
Joined: Tue Apr 05, 2016 5:38 am

Re: Lower Return Decade Says Jack: Thoughts?

Post by Ron Scott » Sun Sep 09, 2018 3:09 pm

midareff wrote:
Sun Sep 09, 2018 11:16 am
The answer is save enough and retire with enough so you are not dependent on returns for your life style.
Bingo.

Why count on investment growth above inflation to sleep at night during your retirement?

JustWantToGetItRight
Posts: 138
Joined: Sat Aug 18, 2018 2:18 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by JustWantToGetItRight » Sun Sep 09, 2018 6:34 pm

CarpeDiem22 wrote:
Sun Sep 09, 2018 11:14 am
Yes, lower return is EXPECTED. Actual return could be much higher or much lower. On the other hand, CD would ensure low return.
Man, this drives me crazy...you are right...it could be lower....we've had a long run...I still have 15 years before retirement...but would hate to get in with my lump sum I have right before a fall....

JustWantToGetItRight
Posts: 138
Joined: Sat Aug 18, 2018 2:18 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by JustWantToGetItRight » Sun Sep 09, 2018 6:36 pm

Ron Scott wrote:
Sun Sep 09, 2018 3:09 pm
midareff wrote:
Sun Sep 09, 2018 11:16 am
The answer is save enough and retire with enough so you are not dependent on returns for your life style.
Bingo.

Why count on investment growth above inflation to sleep at night during your retirement?
Of course, I'm saving and making all I can...but isn't the whole idea of this blog and investing to make what you save work for you, and not just let it sit and lose to inflation?

JustWantToGetItRight
Posts: 138
Joined: Sat Aug 18, 2018 2:18 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by JustWantToGetItRight » Sun Sep 09, 2018 6:37 pm

EnjoyIt wrote:
Sun Sep 09, 2018 1:31 pm
JustWantToGetItRight wrote:
Sun Sep 09, 2018 11:07 am
Just read Jack Bogle's book (edited in 2017) and was a little discouraged about his comments that we should all expect lower returns in the next decade.

For a 60/40 balanced fund it could be as low as 6% and even 4% in some circumstances. Am I misreading? Because if not, Id rather be in CDs and take a small hit on inflation then incur the risk for a few more percentage points.

Please clear this up for me.

Thanks
So far to my knowledge there has never been a single person who has been able to correctly predict market returns. Jack Bogle is a hero for investors but even he does not posses a crystal ball. Either way you only have 1 of two options: Do nothing, or do something. I am choosing to do nothing which I think was another one of Mr. Bogles recommendations.

Wow...he did say that you could choose to do nothing, but that would guarantee to lose to inflation. What are your thoughts on that?

SimplicityNow
Posts: 472
Joined: Fri Aug 05, 2016 10:31 am

Re: Lower Return Decade Says Jack: Thoughts?

Post by SimplicityNow » Sun Sep 09, 2018 6:40 pm

JustWantToGetItRight wrote:
Sun Sep 09, 2018 6:34 pm
CarpeDiem22 wrote:
Sun Sep 09, 2018 11:14 am
Yes, lower return is EXPECTED. Actual return could be much higher or much lower. On the other hand, CD would ensure low return.
Man, this drives me crazy...you are right...it could be lower....we've had a long run...I still have 15 years before retirement...but would hate to get in with my lump sum I have right before a fall....
And so would anyone else. There is no way to tell. No one can predict it. Not jack Bogle, not Warren Buffet, not you or me.

All you can do is pick an asset allocation you are comfortable with whether the market goes up or down and then invest.
Use your need, willingness and ability to take risk to help you decide on your asset allocation. Then do it.
There is no "correct" answer and no matter how many different ways it is asked the answer will still be the same.

JustWantToGetItRight
Posts: 138
Joined: Sat Aug 18, 2018 2:18 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by JustWantToGetItRight » Sun Sep 09, 2018 6:41 pm

Ron Scott wrote:
Sun Sep 09, 2018 3:09 pm
midareff wrote:
Sun Sep 09, 2018 11:16 am
The answer is save enough and retire with enough so you are not dependent on returns for your life style.
Bingo.

Why count on investment growth above inflation to sleep at night during your retirement?
Unsure what you mean. If we could all retire just by saving and using bank accounts, and if we could all NOT worry that in 24 years our money will be significantly worth less due to inflation, then I wouldn't be spending any time on this blog at all. I'd have a checking, CDs, and sleep just fine. Thoughts?
Last edited by JustWantToGetItRight on Sun Sep 09, 2018 6:43 pm, edited 1 time in total.

JustWantToGetItRight
Posts: 138
Joined: Sat Aug 18, 2018 2:18 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by JustWantToGetItRight » Sun Sep 09, 2018 6:42 pm

SimplicityNow wrote:
Sun Sep 09, 2018 6:40 pm
JustWantToGetItRight wrote:
Sun Sep 09, 2018 6:34 pm
CarpeDiem22 wrote:
Sun Sep 09, 2018 11:14 am
Yes, lower return is EXPECTED. Actual return could be much higher or much lower. On the other hand, CD would ensure low return.
Man, this drives me crazy...you are right...it could be lower....we've had a long run...I still have 15 years before retirement...but would hate to get in with my lump sum I have right before a fall....
And so would anyone else. There is no way to tell. No one can predict it. Not jack Bogle, not Warren Buffet, not you or me.

All you can do is pick an asset allocation you are comfortable with whether the market goes up or down and then invest.
Use your need, willingness and ability to take risk to help you decide on your asset allocation. Then do it.
There is no "correct" answer and no matter how many different ways it is asked the answer will still be the same.

Thank you sir. I know I know....It just helps to discuss and bounce this stuff off of you. Appreciate you engaging. Cheers

JustWantToGetItRight
Posts: 138
Joined: Sat Aug 18, 2018 2:18 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by JustWantToGetItRight » Sun Sep 09, 2018 6:44 pm

wootwoot wrote:
Sun Sep 09, 2018 1:01 pm
This prediction has been posted on countless times. Rather than rehashing it again try the search bar.
:sharebeer
Sorry my friend. I did conduct a search and I could not find. But I'll take your word for it....If you would, kindly give me a few search tips....I looked for Lower Returns Expected....stuff like that...
Last edited by JustWantToGetItRight on Sun Sep 09, 2018 6:45 pm, edited 1 time in total.

RadAudit
Posts: 3005
Joined: Mon May 26, 2008 10:20 am
Location: Second star on the right and straight on 'til morning

Re: Lower Return Decade Says Jack: Thoughts?

Post by RadAudit » Sun Sep 09, 2018 6:45 pm

JustWantToGetItRight wrote:
Sun Sep 09, 2018 6:34 pm
Man, this drives me crazy...you are right...it could be lower....we've had a long run...I still have 15 years before retirement...but would hate to get in with my lump sum I have right before

So, if you retire at normal retirement age in 15 years, you may have up to 45 years remaining (30 in retirement) to live and withdraw funds from your portfolio. Hope you have a large portfolio and a small projected SWR. :wink:
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The Calvary isn't coming, kids. You are on your own.

User avatar
HomerJ
Posts: 11574
Joined: Fri Jun 06, 2008 12:50 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by HomerJ » Sun Sep 09, 2018 6:45 pm

EnjoyIt wrote:
Sun Sep 09, 2018 1:31 pm
JustWantToGetItRight wrote:
Sun Sep 09, 2018 11:07 am
Just read Jack Bogle's book (edited in 2017) and was a little discouraged about his comments that we should all expect lower returns in the next decade.

For a 60/40 balanced fund it could be as low as 6% and even 4% in some circumstances. Am I misreading? Because if not, Id rather be in CDs and take a small hit on inflation then incur the risk for a few more percentage points.

Please clear this up for me.

Thanks
So far to my knowledge there has never been a single person who has been able to correctly predict market returns. Jack Bogle is a hero for investors but even he does not posses a crystal ball. Either way you only have 1 of two options: Do nothing, or do something. I am choosing to do nothing which I think was another one of Mr. Bogles recommendations.
This. I love Mr. Bogle, but he's an idiot when he predicts returns. Nobody knows enough to predict returns acurrately. He needs to stop doing that. Many "experts" predicted 4.5% real returns back in 2011... Instead, we've gotten like 12%-13% real returns... That's not just a little bit off. That tells you the "experts" can't predict returns.

That said, I say plan for low returns... 3%-4%... and then be pleasantly surprised 95% of the time. And when someone runs in here and predicts "only 4% returns going forward", you don't have to change a thing.
The J stands for Jay

RickBoglehead
Posts: 649
Joined: Wed Feb 14, 2018 9:10 am

Re: Lower Return Decade Says Jack: Thoughts?

Post by RickBoglehead » Sun Sep 09, 2018 8:28 pm

stocknoob4111 wrote:
Sun Sep 09, 2018 12:46 pm
I posted a very similar question a few days ago, many smart alecs on this forum predicted exactly a 6.47587646% return so you have your answer :D
Total BS. It will be 6.475843.

Ron Scott
Posts: 776
Joined: Tue Apr 05, 2016 5:38 am

Re: Lower Return Decade Says Jack: Thoughts?

Post by Ron Scott » Sun Sep 09, 2018 8:41 pm

JustWantToGetItRight wrote:
Sun Sep 09, 2018 6:41 pm
Ron Scott wrote:
Sun Sep 09, 2018 3:09 pm
midareff wrote:
Sun Sep 09, 2018 11:16 am
The answer is save enough and retire with enough so you are not dependent on returns for your life style.
Bingo.

Why count on investment growth above inflation to sleep at night during your retirement?
Unsure what you mean. If we could all retire just by saving and using bank accounts, and if we could all NOT worry that in 24 years our money will be significantly worth less due to inflation, then I wouldn't be spending any time on this blog at all. I'd have a checking, CDs, and sleep just fine. Thoughts?
Relying on checking accounts and CDs will likely leave you earning BELOW inflation, especially after taxes. It would be nice if a mix of stocks and bonds performed in the future as they often did in the past, but even a 0-2% real return is better that a negative return.

Always invest smartly, but do not rely on your smart investments to make up for a failure to save adequately.

TigerNest
Posts: 304
Joined: Mon May 10, 2010 12:58 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by TigerNest » Sun Sep 09, 2018 9:16 pm

10 year Treasury bills are a little under 3%.

Equity risk premium for the last 100 years has been 3.5% - 5.5%. It's been declining for years, but let's just use that range.

That means the market expects a 6.5% - 8.5% nominal return on the equity market over the next decade.

mikeyzito22
Posts: 72
Joined: Sat Dec 02, 2017 5:42 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by mikeyzito22 » Sun Sep 09, 2018 9:39 pm

SimplicityNow wrote:
Sun Sep 09, 2018 6:40 pm
JustWantToGetItRight wrote:
Sun Sep 09, 2018 6:34 pm
CarpeDiem22 wrote:
Sun Sep 09, 2018 11:14 am
Yes, lower return is EXPECTED. Actual return could be much higher or much lower. On the other hand, CD would ensure low return.
Man, this drives me crazy...you are right...it could be lower....we've had a long run...I still have 15 years before retirement...but would hate to get in with my lump sum I have right before a fall....
And so would anyone else. There is no way to tell. No one can predict it. Not jack Bogle, not Warren Buffet, not you or me.

All you can do is pick an asset allocation you are comfortable with whether the market goes up or down and then invest.
Use your need, willingness and ability to take risk to help you decide on your asset allocation. Then do it.
There is no "correct" answer and no matter how many different ways it is asked the answer will still be the same.
Exactly, Didn't we all read that time in the market is better than timing the market? There was an article that showed a dude buying at all-time highs right before dips and never selling and he turned out just fine. Lump it in or DCA. It really doesn't matter, but make sure to be invested and have an emergency fund. Am I right?

sambb
Posts: 2130
Joined: Sun Mar 10, 2013 3:31 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by sambb » Sun Sep 09, 2018 9:39 pm

Not sure that Mr bogle could be sure of the future - didnt think anyone could, but he might think he can, and that might be a concern. That being said, maybe this is just his educated guess. Only time will tell.

pkcrafter
Posts: 13012
Joined: Sun Mar 04, 2007 12:19 pm
Location: CA
Contact:

Re: Lower Return Decade Says Jack: Thoughts?

Post by pkcrafter » Sun Sep 09, 2018 11:07 pm

JustWantToGetItRight wrote:
Sun Sep 09, 2018 11:07 am
Just read Jack Bogle's book (edited in 2017) and was a little discouraged about his comments that we should all expect lower returns in the next decade.

I guess if there is a decade of abnormally higher returns, then you might expect lower than average returns, but what do you do about it? Nothing.

For a 60/40 balanced fund it could be as low as 6% and even 4% in some circumstances.

I would not call 6% return low for a 60/40 portfolio. 100% S&P500 has averaged 10.4%/year for the last 50 years but it certainly wasn't 10% every year or every decade.


Am I misreading? Because if not, Id rather be in CDs and take a small hit on inflation then incur the risk for a few more percentage points.

You don't know what the market will do, so you do nothing. If you start "adjusting" your portfolio based on noise and feelings, you are virtually guaranteed to under perform what the market gives you. Having said that, you need to back off equities somewhat when nearing retirement because a bad sequence of returns can burn you. But even then you don't get out.

Paul


Thanks
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

AlohaJoe
Posts: 3687
Joined: Mon Nov 26, 2007 2:00 pm
Location: Saigon, Vietnam

Re: Lower Return Decade Says Jack: Thoughts?

Post by AlohaJoe » Sun Sep 09, 2018 11:13 pm

JustWantToGetItRight wrote:
Sun Sep 09, 2018 11:07 am
Just read Jack Bogle's book (edited in 2017) and was a little discouraged about his comments that we should all expect lower returns in the next decade.

For a 60/40 balanced fund it could be as low as 6% and even 4% in some circumstances. Am I misreading? Because if not, Id rather be in CDs and take a small hit on inflation then incur the risk for a few more percentage points.

Please clear this up for me.

Thanks
Is he good at predicting the market? Does he have a track record of doing so? If not, why do you care what he wrote? Lots of people make predictions.

tibbitts
Posts: 7936
Joined: Tue Feb 27, 2007 6:50 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by tibbitts » Sun Sep 09, 2018 11:41 pm

mikeyzito22 wrote:
Sun Sep 09, 2018 9:39 pm
SimplicityNow wrote:
Sun Sep 09, 2018 6:40 pm
JustWantToGetItRight wrote:
Sun Sep 09, 2018 6:34 pm
CarpeDiem22 wrote:
Sun Sep 09, 2018 11:14 am
Yes, lower return is EXPECTED. Actual return could be much higher or much lower. On the other hand, CD would ensure low return.
Man, this drives me crazy...you are right...it could be lower....we've had a long run...I still have 15 years before retirement...but would hate to get in with my lump sum I have right before a fall....
And so would anyone else. There is no way to tell. No one can predict it. Not jack Bogle, not Warren Buffet, not you or me.

All you can do is pick an asset allocation you are comfortable with whether the market goes up or down and then invest.
Use your need, willingness and ability to take risk to help you decide on your asset allocation. Then do it.
There is no "correct" answer and no matter how many different ways it is asked the answer will still be the same.
Exactly, Didn't we all read that time in the market is better than timing the market? There was an article that showed a dude buying at all-time highs right before dips and never selling and he turned out just fine. Lump it in or DCA. It really doesn't matter, but make sure to be invested and have an emergency fund. Am I right?
No, you're not right. That hypothetical person only turned out fine over periods of decent market returns, with substantial time in the market - and even then not relative to someone who always bought at optimal times. That's not actionable, but the fact is that it may be possible to do all the right things that everyone here advocates, and still lose.

tibbitts
Posts: 7936
Joined: Tue Feb 27, 2007 6:50 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by tibbitts » Sun Sep 09, 2018 11:46 pm

JustWantToGetItRight wrote:
Sun Sep 09, 2018 11:07 am
Just read Jack Bogle's book (edited in 2017) and was a little discouraged about his comments that we should all expect lower returns in the next decade.

For a 60/40 balanced fund it could be as low as 6% and even 4% in some circumstances. Am I misreading? Because if not, Id rather be in CDs and take a small hit on inflation then incur the risk for a few more percentage points.

Please clear this up for me.

Thanks
I thought Bogle's most recent predictions were much lower; hopefully somebody else knows. Are you talking nominal or real?

H-Town
Posts: 1231
Joined: Sun Feb 26, 2017 2:08 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by H-Town » Sun Sep 09, 2018 11:49 pm

JustWantToGetItRight wrote:
Sun Sep 09, 2018 11:07 am
Just read Jack Bogle's book (edited in 2017) and was a little discouraged about his comments that we should all expect lower returns in the next decade.

For a 60/40 balanced fund it could be as low as 6% and even 4% in some circumstances. Am I misreading? Because if not, Id rather be in CDs and take a small hit on inflation then incur the risk for a few more percentage points.

Please clear this up for me.

Thanks
Like everything in life, a lower expectation usually turns out the best. You would rather expect a lower return and be pleasantly surprised with a bigger return than expect a higher return and be disappointed that you don't have enough money.

KyleAAA
Posts: 6674
Joined: Wed Jul 01, 2009 5:35 pm
Contact:

Re: Lower Return Decade Says Jack: Thoughts?

Post by KyleAAA » Mon Sep 10, 2018 12:03 am

I am not convinced by th logic that lower real returns are to be expected. Supposedly we should have been getting low returns for a while now and I’m not sure the underlying assumptions hold up.

2015
Posts: 1830
Joined: Mon Feb 10, 2014 2:32 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by 2015 » Mon Sep 10, 2018 12:30 am

RickBoglehead wrote:
Sun Sep 09, 2018 8:28 pm
stocknoob4111 wrote:
Sun Sep 09, 2018 12:46 pm
I posted a very similar question a few days ago, many smart alecs on this forum predicted exactly a 6.47587646% return so you have your answer :D
Total BS. It will be 6.475843.
Interesting. My chicken bones specifically added a "4" the end of number. What were they trying to tell me?

To answer OP's question, I agree with the post up thread stating that no one knows. Buffet/Munger have said in all of their years of investing they have not made a single decision based on macroeconomics, but rather microeconomics. They have also stated people who make predictions have some sort of an agenda. I'll leave it to your agenda to fantasize what Mr. Bogle's might be.

For the record, I do not believe in making any decisions based as a result of falling into the trap of Appeal to Authority bias, be it from any "expert", from "one of the good guys", or from "well-respected" BH forum members. OTOH, I've stated before I've sufficiently verified to my own satisfaction based on my own study outside the fields of economics, investing, and personal finance that much of what Taylor Larimore has contributed is corroborated there.

JBTX
Posts: 3910
Joined: Wed Jul 26, 2017 12:46 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by JBTX » Mon Sep 10, 2018 1:08 am

TigerNest wrote:
Sun Sep 09, 2018 9:16 pm
10 year Treasury bills are a little under 3%.

Equity risk premium for the last 100 years has been 3.5% - 5.5%. It's been declining for years, but let's just use that range.

That means the market expects a 6.5% - 8.5% nominal return on the equity market over the next decade.
While this could happen, it seems mathematically improbable. 2% inflation + 2% real GDP/earnings growth + 2% dividends = 6% nominal, and that assumes PEs do not decrease.

hithere
Posts: 33
Joined: Sat Mar 31, 2018 5:30 am

Re: Lower Return Decade Says Jack: Thoughts?

Post by hithere » Mon Sep 10, 2018 2:38 am

EnjoyIt wrote:
Sun Sep 09, 2018 1:31 pm
JustWantToGetItRight wrote:
Sun Sep 09, 2018 11:07 am
Just read Jack Bogle's book (edited in 2017) and was a little discouraged about his comments that we should all expect lower returns in the next decade.

For a 60/40 balanced fund it could be as low as 6% and even 4% in some circumstances. Am I misreading? Because if not, Id rather be in CDs and take a small hit on inflation then incur the risk for a few more percentage points.

Please clear this up for me.

Thanks
So far to my knowledge there has never been a single person who has been able to correctly predict market returns. Jack Bogle is a hero for investors but even he does not posses a crystal ball. Either way you only have 1 of two options: Do nothing, or do something. I am choosing to do nothing which I think was another one of Mr. Bogles recommendations.
There's a third option. If an investor is fairly confident that the returns on the stock market won't be that good, he could put his money into other investment vehicles. It's not like the stock market is the only way to invest money long term.

CarpeDiem22
Posts: 90
Joined: Tue May 22, 2018 11:20 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by CarpeDiem22 » Mon Sep 10, 2018 2:51 am

HomerJ wrote:
Sun Sep 09, 2018 6:45 pm
EnjoyIt wrote:
Sun Sep 09, 2018 1:31 pm
JustWantToGetItRight wrote:
Sun Sep 09, 2018 11:07 am
Just read Jack Bogle's book (edited in 2017) and was a little discouraged about his comments that we should all expect lower returns in the next decade.

For a 60/40 balanced fund it could be as low as 6% and even 4% in some circumstances. Am I misreading? Because if not, Id rather be in CDs and take a small hit on inflation then incur the risk for a few more percentage points.

Please clear this up for me.

Thanks
So far to my knowledge there has never been a single person who has been able to correctly predict market returns. Jack Bogle is a hero for investors but even he does not posses a crystal ball. Either way you only have 1 of two options: Do nothing, or do something. I am choosing to do nothing which I think was another one of Mr. Bogles recommendations.
This. I love Mr. Bogle, but he's an idiot when he predicts returns. Nobody knows enough to predict returns acurrately. He needs to stop doing that. Many "experts" predicted 4.5% real returns back in 2011... Instead, we've gotten like 12%-13% real returns... That's not just a little bit off. That tells you the "experts" can't predict returns.

That said, I say plan for low returns... 3%-4%... and then be pleasantly surprised 95% of the time. And when someone runs in here and predicts "only 4% returns going forward", you don't have to change a thing.
Wow, did I just read this on a forum dedicated to Jack Bogle? :P He is not "predicting" returns, he is setting expectations which is a big part of decision making and avoiding recklessness when it comes to finances. The stock returns come from the underlying businesses and nothing else, and there is no way that the two can become uncorrelated in the long term (10-year is not long term for a business btw, in my opinion).

Ron Scott
Posts: 776
Joined: Tue Apr 05, 2016 5:38 am

Re: Lower Return Decade Says Jack: Thoughts?

Post by Ron Scott » Mon Sep 10, 2018 2:56 am

TigerNest wrote:
Sun Sep 09, 2018 9:16 pm
10 year Treasury bills are a little under 3%.

Equity risk premium for the last 100 years has been 3.5% - 5.5%. It's been declining for years, but let's just use that range.

That means the market expects a 6.5% - 8.5% nominal return on the equity market over the next decade.
THIS is THE major error in thinking about returns. You are personifying the market... it doesn’t “expect”, it simply reflects what participants do IN THE FUTURE.

Neither of us knows how stocks will perform during the coming years. But conservatives will assume and plan for low returns since they will be looking for the big, long advance from the last abyss to crest and the cost of RELIANCE on numbers like yours is simply too great.

Conservatives correctly see this as a trade off between a) having extra money in old age (or not enjoying the spend in early retirement), and b) financial ruin.

zuma
Posts: 374
Joined: Thu Dec 29, 2016 12:15 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by zuma » Mon Sep 10, 2018 3:56 am

JustWantToGetItRight wrote:
Sun Sep 09, 2018 6:44 pm
wootwoot wrote:
Sun Sep 09, 2018 1:01 pm
This prediction has been posted on countless times. Rather than rehashing it again try the search bar.
:sharebeer
Sorry my friend. I did conduct a search and I could not find. But I'll take your word for it....If you would, kindly give me a few search tips....I looked for Lower Returns Expected....stuff like that...
I searched for 'Lower Returns Expected' and found these threads from 2018:

Why are stock returns expected to be so low over the next decade?

Why are expected returns so much lower than historical returns?

Lower expected stock returns means lower expected volatility?

Could all of these "low expected returns over next 10 years" predictions be wrong?

Seasoned bogleheads repressing the thought of lower expected returns

User avatar
randomizer
Posts: 1447
Joined: Sun Jul 06, 2014 3:46 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by randomizer » Mon Sep 10, 2018 4:10 am

Just keep saving and carry on.
87.5:12.5, EM tilt — HODL the course!

User avatar
midareff
Posts: 5712
Joined: Mon Nov 29, 2010 10:43 am
Location: Biscayne Bay, South Florida

Re: Lower Return Decade Says Jack: Thoughts?

Post by midareff » Mon Sep 10, 2018 7:11 am

JustWantToGetItRight wrote:
Sun Sep 09, 2018 6:36 pm
Ron Scott wrote:
Sun Sep 09, 2018 3:09 pm
midareff wrote:
Sun Sep 09, 2018 11:16 am
The answer is save enough and retire with enough so you are not dependent on returns for your life style.
Bingo.

Why count on investment growth above inflation to sleep at night during your retirement?
Of course, I'm saving and making all I can...but isn't the whole idea of this blog and investing to make what you save work for you, and not just let it sit and lose to inflation?
Working for you has many forms..... efficiency with money in banking, car purchases, cash back credit cards, life style moderation, not running up debt, savings rate, how to invest and asset allocation, risk avoidance, prudent investments, low costs...... I could go on. This site is about much more than just investment returns.

EnjoyIt
Posts: 1545
Joined: Sun Dec 29, 2013 8:06 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by EnjoyIt » Thu Sep 13, 2018 1:03 pm

JustWantToGetItRight wrote:
Sun Sep 09, 2018 6:37 pm
EnjoyIt wrote:
Sun Sep 09, 2018 1:31 pm
JustWantToGetItRight wrote:
Sun Sep 09, 2018 11:07 am
Just read Jack Bogle's book (edited in 2017) and was a little discouraged about his comments that we should all expect lower returns in the next decade.

For a 60/40 balanced fund it could be as low as 6% and even 4% in some circumstances. Am I misreading? Because if not, Id rather be in CDs and take a small hit on inflation then incur the risk for a few more percentage points.

Please clear this up for me.

Thanks
So far to my knowledge there has never been a single person who has been able to correctly predict market returns. Jack Bogle is a hero for investors but even he does not posses a crystal ball. Either way you only have 1 of two options: Do nothing, or do something. I am choosing to do nothing which I think was another one of Mr. Bogles recommendations.

Wow...he did say that you could choose to do nothing, but that would guarantee to lose to inflation. What are your thoughts on that?
I think he meant doing nothing is to stick with your asset allocation. That is my plan.

JustWantToGetItRight
Posts: 138
Joined: Sat Aug 18, 2018 2:18 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by JustWantToGetItRight » Thu Sep 13, 2018 1:06 pm

EnjoyIt wrote:
Thu Sep 13, 2018 1:03 pm
JustWantToGetItRight wrote:
Sun Sep 09, 2018 6:37 pm
EnjoyIt wrote:
Sun Sep 09, 2018 1:31 pm
JustWantToGetItRight wrote:
Sun Sep 09, 2018 11:07 am
Just read Jack Bogle's book (edited in 2017) and was a little discouraged about his comments that we should all expect lower returns in the next decade.

For a 60/40 balanced fund it could be as low as 6% and even 4% in some circumstances. Am I misreading? Because if not, Id rather be in CDs and take a small hit on inflation then incur the risk for a few more percentage points.

Please clear this up for me.

Thanks
So far to my knowledge there has never been a single person who has been able to correctly predict market returns. Jack Bogle is a hero for investors but even he does not posses a crystal ball. Either way you only have 1 of two options: Do nothing, or do something. I am choosing to do nothing which I think was another one of Mr. Bogles recommendations.

Wow...he did say that you could choose to do nothing, but that would guarantee to lose to inflation. What are your thoughts on that?
I think he meant doing nothing is to stick with your asset allocation. That is my plan.



Right! That makes more sense. Thank you.

WhiteMaxima
Posts: 1306
Joined: Thu May 19, 2016 5:04 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by WhiteMaxima » Thu Sep 13, 2018 1:09 pm

Lower real return because of high inflation, high interest rate and low consumption due to aging population and lower growth?

randomguy
Posts: 6171
Joined: Wed Sep 17, 2014 9:00 am

Re: Lower Return Decade Says Jack: Thoughts?

Post by randomguy » Thu Sep 13, 2018 1:19 pm

CarpeDiem22 wrote:
Mon Sep 10, 2018 2:51 am
HomerJ wrote:
Sun Sep 09, 2018 6:45 pm
EnjoyIt wrote:
Sun Sep 09, 2018 1:31 pm
JustWantToGetItRight wrote:
Sun Sep 09, 2018 11:07 am
Just read Jack Bogle's book (edited in 2017) and was a little discouraged about his comments that we should all expect lower returns in the next decade.

For a 60/40 balanced fund it could be as low as 6% and even 4% in some circumstances. Am I misreading? Because if not, Id rather be in CDs and take a small hit on inflation then incur the risk for a few more percentage points.

Please clear this up for me.

Thanks
So far to my knowledge there has never been a single person who has been able to correctly predict market returns. Jack Bogle is a hero for investors but even he does not posses a crystal ball. Either way you only have 1 of two options: Do nothing, or do something. I am choosing to do nothing which I think was another one of Mr. Bogles recommendations.
This. I love Mr. Bogle, but he's an idiot when he predicts returns. Nobody knows enough to predict returns acurrately. He needs to stop doing that. Many "experts" predicted 4.5% real returns back in 2011... Instead, we've gotten like 12%-13% real returns... That's not just a little bit off. That tells you the "experts" can't predict returns.

That said, I say plan for low returns... 3%-4%... and then be pleasantly surprised 95% of the time. And when someone runs in here and predicts "only 4% returns going forward", you don't have to change a thing.
Wow, did I just read this on a forum dedicated to Jack Bogle? :P He is not "predicting" returns, he is setting expectations which is a big part of decision making and avoiding recklessness when it comes to finances. The stock returns come from the underlying businesses and nothing else, and there is no way that the two can become uncorrelated in the long term (10-year is not long term for a business btw, in my opinion).
Here is jack in Jan 2011 https://money.cnn.com/2010/12/31/pf/inv ... /index.htm predicting 7-8% which as was pointed out was almost half of what we got so far. Maybe we will have a 50% correction over the next 2 years to bring things in line. Maybe not. None of this should be considered a personal criticism of Bogle. It is a criticism of ALL market predication schemes. I could sit here and predict 9%+ returns for the next decade AND if I did it for the next 30 years, I would be right more often than not. But it isn't remotely useful.

Planning for low returns is not free. You sacrifice spending now and end up with way too much money in the future. Not the worst problem but far from optimal.

User avatar
tennisplyr
Posts: 1753
Joined: Tue Jan 28, 2014 1:53 pm
Location: Sarasota, FL

Re: Lower Return Decade Says Jack: Thoughts?

Post by tennisplyr » Thu Sep 13, 2018 3:25 pm

What if he's wrong?
Those who move forward with a happy spirit will find that things always work out.

Vanguard Fan 1367
Posts: 753
Joined: Wed Feb 08, 2017 3:09 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by Vanguard Fan 1367 » Thu Sep 13, 2018 4:30 pm

I have really appreciated Jack's conservative predictions. Everyone on this forum should expect a Total Stock Market Fund drop of 50 percent or so sometime in the next few years. The trick is to not panic and sell when there is blood in the streets, to quote Warren. That drop will help put Jack's conservative predictions back into the real world of real returns.


In his writings Bogle says that the high fee folks are predicting higher returns than Mr. Bogle predicts to justify their high fees. So if the higher fee folks charge say 2 percent and you only get 6 percent you lose one third of your gain. I think this is significant and so do many of you Bogleheads. Yes some of the high fee folks have been right lately on the high returns but the bear market is coming.

Thesaints
Posts: 1619
Joined: Tue Jun 20, 2017 12:25 am

Re: Lower Return Decade Says Jack: Thoughts?

Post by Thesaints » Thu Sep 13, 2018 4:32 pm

Where can I sign for a 5% return on a 60/40 portfolio over the next 10 years ?

ge1
Posts: 296
Joined: Sat Apr 28, 2012 8:15 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by ge1 » Thu Sep 13, 2018 4:53 pm

These discussion always make me laugh. People act as if we had absolutely no idea whatsoever what long term returns will be.

Let’s do bonds first: Bond yields are at record lows, so going forward 40% of your portfolio will have lower returns. Mathematical certainty.

Stocks: The US stock market had an unprecedented bull run and valuation are near record high level. Now, can the stock market keep going higher? Yes, absolutely. Is it likely that the valuation stay that elevation looking forward 5 or 10 years? No.

So Jack - as usual - is absolutely right. Expected returns are much lower than history and we better consider this in our own financial planning.

visualguy
Posts: 680
Joined: Thu Jan 30, 2014 1:32 am

Re: Lower Return Decade Says Jack: Thoughts?

Post by visualguy » Thu Sep 13, 2018 6:03 pm

Also, a lower return decade could mean different things... For example, a drop of 50% and then a multi-year recovery, or just a decade of stagnation without much volatility, or a decade of constant high volatility without going anywhere much. These scenarios aren't quite the same in terms of their financial as well as psychological impact.

benway
Posts: 49
Joined: Thu Jun 30, 2011 5:17 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by benway » Thu Sep 13, 2018 7:36 pm

JustWantToGetItRight wrote:
Sun Sep 09, 2018 11:07 am
Just read Jack Bogle's book (edited in 2017) and was a little discouraged about his comments that we should all expect lower returns in the next decade.

For a 60/40 balanced fund it could be as low as 6% and even 4% in some circumstances. Am I misreading? Because if not, Id rather be in CDs and take a small hit on inflation then incur the risk for a few more percentage points.

Please clear this up for me.

Thanks
“A few more percentage points” is actually quite substantial in the long run.

Thesaints
Posts: 1619
Joined: Tue Jun 20, 2017 12:25 am

Re: Lower Return Decade Says Jack: Thoughts?

Post by Thesaints » Thu Sep 13, 2018 7:38 pm

benway wrote:
Thu Sep 13, 2018 7:36 pm
“A few more percentage points” is actually quite substantial in the long run.
especially when the percentage points are few to begin with, so that "a few more" actually means "double return" !

protagonist
Posts: 5368
Joined: Sun Dec 26, 2010 12:47 pm

Re: Lower Return Decade Says Jack: Thoughts?

Post by protagonist » Thu Sep 13, 2018 8:09 pm

Look at his predictions ten years ago and see how well they match reality for this decade.

My guess is that he probably did as well as anybody who enters the annual "Dow challenge" guessing game. If he nailed it, he was one really lucky guy.

Who would have predicted a black president in 1998? Who would have predicted Trump in 2006?

I'm not suggesting that Jack Bogle is not brilliant and doesn't know his stuff. I am suggesting that no "expert" can see ten years into the future, to the point of predicting stock market returns, any better than you or I can. Speaking for myself, I am clueless. The future is chaotic.

Read this. It is more important than anybody's future predictions. https://www.newyorker.com/magazine/2005 ... -an-expert

Then get a copy of "The Book of Predictions" (Wallace et al), published in 1980. See how well the experts of 1980 did predicting ten or more years into the future. It's great for a laugh. And it may change your life. The used hardcover is currently available on Amazon for $4.05. If you put any faith in expert clairvoyance, it could be the best four bucks you ever spent.

Thesaints
Posts: 1619
Joined: Tue Jun 20, 2017 12:25 am

Re: Lower Return Decade Says Jack: Thoughts?

Post by Thesaints » Thu Sep 13, 2018 8:13 pm

protagonist wrote:
Thu Sep 13, 2018 8:09 pm
Look at his predictions ten years ago and see how well they match reality for this decade.
Ten years ago, after the crash depressed market valuations, the theory forecasted returns more likely to be above the historical average than below it.
The theory was correct.

Post Reply