Do stocks always go up long term?

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avalpert
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Re: Do stocks always go up long term?

Post by avalpert » Fri May 19, 2017 2:36 pm

Earl Lemongrab wrote:
avalpert wrote:It may be the case that 100 year stock returns in Japan are positive - and it may remain true 100 years from now but the same cannot be said for Russian shareholders from 100 years ago (at least 100 years ago March). So, again, stocks do not always go up long term - there are no guarantees at all.

How did Imperial Russian bond holders do? You can't really count those kind of events into a rational evaluation of investing. I mean, we could have nuclear war or an asteroid strike too.


This is a picture perfect example of the biases that make humans really bad at incorporating tail-risk into their intuition. Not only do we dismiss a real event that actually happened but it 'isn't even rational' to consider... sorry, the irrational thing ((and really textbook example of it)) is to not count those kinds of events - those aren't even black swan events, they aren't even hypothetical extremes, they are known possibilities that happened in humanities not that distant past.

So yeah, stocks always go up long term... except when they don't but those events don't count...

grayparrot
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Re: Do stocks always go up long term?

Post by grayparrot » Fri May 19, 2017 2:40 pm

avalpert wrote:It may be the case that 100 year stock returns in Japan are positive - and it may remain true 100 years from now but the same cannot be said for Russian shareholders from 100 years ago (at least 100 years ago March). So, again, stocks do not always go up long term - there are no guarantees at all.


well that's true, I guess one has to distinguish between asset values/prices and ownership. If somebody steals your brokerage account, then your stocks have not gone up, for you. Do you not believe that the aggregate market value of all widely traded business interests in Russia today is higher than it was 100 years ago, regardless of ownership transfer? But point taken; best not to highlight sub-components, but to note that "the aggregate value of all global publicly traded securities has never been lower after x years" while conceding that extraordinary global events could lead to different outcomes in the future...outcomes that would likely make portfolio concerns irrelevant. Naturally there are no absolute guarantees...we could all be living in a computer simulation that could be rebooted at any moment.

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knpstr
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Re: Do stocks always go up long term?

Post by knpstr » Fri May 19, 2017 2:52 pm

avalpert wrote:
Earl Lemongrab wrote:
avalpert wrote:It may be the case that 100 year stock returns in Japan are positive - and it may remain true 100 years from now but the same cannot be said for Russian shareholders from 100 years ago (at least 100 years ago March). So, again, stocks do not always go up long term - there are no guarantees at all.

How did Imperial Russian bond holders do? You can't really count those kind of events into a rational evaluation of investing. I mean, we could have nuclear war or an asteroid strike too.


This is a picture perfect example of the biases that make humans really bad at incorporating tail-risk into their intuition. Not only do we dismiss a real event that actually happened but it 'isn't even rational' to consider... sorry, the irrational thing ((and really textbook example of it)) is to not count those kinds of events - those aren't even black swan events, they aren't even hypothetical extremes, they are known possibilities that happened in humanities not that distant past.

So yeah, stocks always go up long term... except when they don't but those events don't count...


I wouldn't bet on communist markets going up in the long term, unless they switch to capitalism or a more open system anyway.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

avalpert
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Joined: Sat Mar 22, 2008 4:58 pm

Re: Do stocks always go up long term?

Post by avalpert » Fri May 19, 2017 2:59 pm

knpstr wrote:
avalpert wrote:
Earl Lemongrab wrote:
avalpert wrote:It may be the case that 100 year stock returns in Japan are positive - and it may remain true 100 years from now but the same cannot be said for Russian shareholders from 100 years ago (at least 100 years ago March). So, again, stocks do not always go up long term - there are no guarantees at all.

How did Imperial Russian bond holders do? You can't really count those kind of events into a rational evaluation of investing. I mean, we could have nuclear war or an asteroid strike too.


This is a picture perfect example of the biases that make humans really bad at incorporating tail-risk into their intuition. Not only do we dismiss a real event that actually happened but it 'isn't even rational' to consider... sorry, the irrational thing ((and really textbook example of it)) is to not count those kinds of events - those aren't even black swan events, they aren't even hypothetical extremes, they are known possibilities that happened in humanities not that distant past.

So yeah, stocks always go up long term... except when they don't but those events don't count...


I wouldn't bet on communist markets going up in the long term, unless they switch to capitalism or a more open system anyway.


Czarist Russia wasn't communist.

avalpert
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Joined: Sat Mar 22, 2008 4:58 pm

Re: Do stocks always go up long term?

Post by avalpert » Fri May 19, 2017 3:07 pm

grayparrot wrote:
avalpert wrote:It may be the case that 100 year stock returns in Japan are positive - and it may remain true 100 years from now but the same cannot be said for Russian shareholders from 100 years ago (at least 100 years ago March). So, again, stocks do not always go up long term - there are no guarantees at all.


well that's true, I guess one has to distinguish between asset values/prices and ownership. If somebody steals your brokerage account, then your stocks have not gone up, for you. Do you not believe that the aggregate market value of all widely traded business interests in Russia today is higher than it was 100 years ago, regardless of ownership transfer? But point taken; best not to highlight sub-components, but to note that "the aggregate value of all global publicly traded securities has never been lower after x years" while conceding that extraordinary global events could lead to different outcomes in the future...outcomes that would likely make portfolio concerns irrelevant. Naturally there are no absolute guarantees...we could all be living in a computer simulation that could be rebooted at any moment.

I guess that would depend on how you define 'publicly traded securities' - if you include the Roman Societas Publicanorum in that then you could see the aggregate value of globally available securities decreased over the long term.

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Earl Lemongrab
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Re: Do stocks always go up long term?

Post by Earl Lemongrab » Fri May 19, 2017 3:26 pm

avalpert wrote:This is a picture perfect example of the biases that make humans really bad at incorporating tail-risk into their intuition. Not only do we dismiss a real event that actually happened but it 'isn't even rational' to consider... sorry, the irrational thing ((and really textbook example of it)) is to not count those kinds of events - those aren't even black swan events, they aren't even hypothetical extremes, they are known possibilities that happened in humanities not that distant past.

So yeah, stocks always go up long term... except when they don't but those events don't count...

The only thing that would have helped the Russian investor was to diversify to other countries, and to have a get out when things went south. The former is actionable investment strategy, of course.

Stocks did up in the long run. Just not Imperial Russian stocks.
This week's fortune cookie: "The stock market may be your ticket to success." I sure hope so!

avalpert
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Joined: Sat Mar 22, 2008 4:58 pm

Re: Do stocks always go up long term?

Post by avalpert » Fri May 19, 2017 4:10 pm

Earl Lemongrab wrote:
avalpert wrote:This is a picture perfect example of the biases that make humans really bad at incorporating tail-risk into their intuition. Not only do we dismiss a real event that actually happened but it 'isn't even rational' to consider... sorry, the irrational thing ((and really textbook example of it)) is to not count those kinds of events - those aren't even black swan events, they aren't even hypothetical extremes, they are known possibilities that happened in humanities not that distant past.

So yeah, stocks always go up long term... except when they don't but those events don't count...

The only thing that would have helped the Russian investor was to diversify to other countries, and to have a get out when things went south. The former is actionable investment strategy, of course.


Agreed, daily threads arguing to the contrary not withstanding.

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