bobcat2 wrote: ↑
Fri Jan 04, 2019 5:35 pm
Had I wanted to cherry pick recent return data to show really bad results, I would have picked real US stock returns for the 9 year period from early March 2000 to early March 2009.
Real stock market return for nine years (March 2000 through March 2009)
annual average return -8.4%
cumulative return over the nine years -61.0%
And in early March of 2009 no one knew whether the bleeding would continue or not.
Instead I picked the returns for the last 20 years and the returns for the first 19 years of this century. It seems reasonable to me to ask how well have the US capital markets done over the last 20 years. Apparently some people think that's an unfair question.
How dare someone have the termity to show US and global stock market returns over the last 20 years!
The point is that your number do not show "how well capital markets have done" (I think you mean "stock", not "capital", though).
You write yourself that choosing another interval in the same 20 years you could have got much worse figures and my observation is that one shouldn't be surprised by this: the stock market is highly volatile and it is always possible to find an interval which yielded any return you need to prove your thesis.
With two crashes, one at its beginning and one midway, who could expect the 20-year return to be anything but disappointing ?
Yet, if one invested steadily throughout the same period, his/her IRR turned out a lot better.
Vice versa, a retiree withdrawing steadily would see his/her prospects a lot less rosy for exactly the opposite reason.
Are these 20 years extraordinary, or unusual ? Not really. Once again, thanks to the market volatility we can find many other periods of comparable length with similar returns.