Why can't we have another 20 years of bull market?

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Scooter57
Posts: 2019
Joined: Thu Jan 24, 2013 8:20 am

Re: Why can't we have another 20 years of bull market?

Post by Scooter57 »

jumppilot wrote: Sun Mar 21, 2021 3:05 pm
Makes sense to me. If we have 5 years of a major downturn, it won’t matter how diversified your 60/40 portfolio is. People are going to be breaking into your house to steal your food.

If us lowly bogleheads have more money than the masses, that won’t protect you from the mob trying to physically hurt you. Try driving a new Corolla in Yemen.
You overestimate the impact of market downturns on most Americans. The people most affected would be young, highly paid corporate employees who assume their special status will last and retirees who expect luxurious lifestyles that could only be funded with S&P500 at 4000.

Outside of upscale suburbs people get by on far less than most people here think they need. Couples live decently on Social Security alone. Younger people live off small service businesses. People still need the roof fixed and the furnace repaired. People will still buy cookies and cupcakes. They will cut back on luxuries, but keep going. The pandemic hit our local jobs hard, but the communities are exceling themselves with food aid that is provided in respectful ways. The market has little to do with the jobs available to most people or their incomes.

Besides, if the market dropped 50% and stayed that way for 20 years, it would still be much higher than it was just a few years ago.

No need to invoke Yemen-like scenarios if the S&P 500 fell to 1950. Or even 1700.
hoops777
Posts: 4603
Joined: Sun Apr 10, 2011 12:23 pm
Location: Behind the 3 point line

Re: Why can't we have another 20 years of bull market?

Post by hoops777 »

fingoals wrote: Sun Mar 21, 2021 3:21 pm
KlangFool wrote: Sat Mar 20, 2021 12:09 pm OP,

Yes, we could. Vice versa, we could have 20 years of bear market too. So, why does any of this matters? It does not.

The only relevant question is are you prepared?

A) If we have 20 years of bull market, you will be fine.

B) If we have 20 years of bear market, you are fine too.

If you are prepared, it won't matter to you. If you are not, why are you not prepared? Isn't that more important than hoping we can predict the future?

Are you prepared?

KlangFool
Sorry, but the emphasized statement above is true only under several implied assumptions: a) a person is young enough to still have a long (30+ years) investment runway and/or b) a person has been fortunate enough to be able to save enough to amass a large enough portfolio prior to the assumed upcoming bear market. If both of these assumptions are not true, then I don't see how, realistically, it would be possible for someone to "be fine".

As for why some people are not prepared, well, there could be a whole host of factors that have been within as well as outside of their control that have influenced their life and prevented them from saving and/or investing any money. I realize that such people represent a minority of this forum's audience, however it is a rather sizeable subset of the population in the larger world.
Well said.
K.I.S.S........so easy to say so difficult to do.
hoops777
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Joined: Sun Apr 10, 2011 12:23 pm
Location: Behind the 3 point line

Re: Why can't we have another 20 years of bull market?

Post by hoops777 »

Scooter57 wrote: Sun Mar 21, 2021 4:59 pm
jumppilot wrote: Sun Mar 21, 2021 3:05 pm
Makes sense to me. If we have 5 years of a major downturn, it won’t matter how diversified your 60/40 portfolio is. People are going to be breaking into your house to steal your food.

If us lowly bogleheads have more money than the masses, that won’t protect you from the mob trying to physically hurt you. Try driving a new Corolla in Yemen.
You overestimate the impact of market downturns on most Americans. The people most affected would be young, highly paid corporate employees who assume their special status will last and retirees who expect luxurious lifestyles that could only be funded with S&P500 at 4000.

Outside of upscale suburbs people get by on far less than most people here think they need. Couples live decently on Social Security alone. Younger people live off small service businesses. People still need the roof fixed and the furnace repaired. People will still buy cookies and cupcakes. They will cut back on luxuries, but keep going. The pandemic hit our local jobs hard, but the communities are exceling themselves with food aid that is provided in respectful ways. The market has little to do with the jobs available to most people or their incomes.

Besides, if the market dropped 50% and stayed that way for 20 years, it would still be much higher than it was just a few years ago.

No need to invoke Yemen-like scenarios if the S&P 500 fell to 1950. Or even 1700.
Completely agree.
This is an investing forum so the general tone is that the stock market is crucial to most people’s lives. It would be interesting to know what pct of the American people would actually suffer if the market dropped 30 or 40 pct and stayed down for a good length of time.
I guarantee you at least 80 pct of adults have no idea about most of the investing topics on this forum.
K.I.S.S........so easy to say so difficult to do.
fingoals
Posts: 1511
Joined: Thu Jan 24, 2019 5:43 pm

Re: Why can't we have another 20 years of bull market?

Post by fingoals »

KlangFool wrote: Sun Mar 21, 2021 4:13 pm
fingoals wrote: Sun Mar 21, 2021 3:21 pm
As for why some people are not prepared, well, there could be a whole host of factors that have been within as well as outside of their control that have influenced their life and prevented them from saving and/or investing any money. I realize that such people represent a minority of this forum's audience, however it is a rather sizeable subset of the population in the larger world.
fingoals,

The average gross saving rate of the country/community/culture that I came from is 30+%. This is for the whole country. It is the MAJORITY for that country.

KlangFool
I'm pretty sure that the above-mentioned number number for the average gross saving rate is based on recent spike from a combination of pandemic relief and significantly reduced spending due to coronavirus-related restrictions. The 30+% data point is clearly an outlier and, therefore, cannot be a foundation for the discussion on the subject for multi-year historical and future time periods.

If we consider historical (pre-pandemic) data for U.S., we will see a completely different picture: not only the average gross saving rate is around 6-8% (based on 2000-2020 data) with a spike of - wait for it ... just 13.7% - in 2020. Moreover, not only the true saving rate is much lower than what you have suggested, an equally or even more important issue is that the majority of Americans do not have even have savings of just $1000 (69% in 2019!; I don't think it is significantly lower in 2021, especially ignoring one-time and temporary pandemic relief money) - I'm not even talking about retirement-level savings, which are orders of magnitude higher. These and other relevant numbers can be found in the following selected resources [1-5].

Before you say that personal cash savings do not reflect the full retirement savings situation because of 401k availability, I would mention that, based on Vanguard's 2020 research study, average and, especially, median 401k balances ($106,478 and $25,775, correspondingly) do not support this hypothesis [6].

[1] https://www.statista.com/topics/1134/personal-savings
[2] https://www.statista.com/statistics/246 ... ted-states
[3] https://time.com/nextadvisor/banking/sa ... te-soaring
[4] https://www.bea.gov/data/income-saving/ ... aving-rate
[5] https://spendmenot.com/blog/american-savings-statistics
[6] https://www.businessinsider.com/persona ... 1k-balance
Triple digit golfer
Posts: 10433
Joined: Mon May 18, 2009 5:57 pm

Re: Why can't we have another 20 years of bull market?

Post by Triple digit golfer »

fingoals wrote: Sun Mar 21, 2021 5:25 pm
KlangFool wrote: Sun Mar 21, 2021 4:13 pm
fingoals wrote: Sun Mar 21, 2021 3:21 pm
As for why some people are not prepared, well, there could be a whole host of factors that have been within as well as outside of their control that have influenced their life and prevented them from saving and/or investing any money. I realize that such people represent a minority of this forum's audience, however it is a rather sizeable subset of the population in the larger world.
fingoals,

The average gross saving rate of the country/community/culture that I came from is 30+%. This is for the whole country. It is the MAJORITY for that country.

KlangFool
I'm pretty sure that the above-mentioned number number for the average gross saving rate is based on recent spike from a combination of pandemic relief and significantly reduced spending due to coronavirus-related restrictions. The 30+% data point is clearly an outlier and, therefore, cannot be a foundation for the discussion on the subject for multi-year historical and future time periods.

If we consider historical (pre-pandemic) data for U.S., we will see a completely different picture: not only the average gross saving rate is around 6-8% (based on 2000-2020 data) with a spike of - wait for it ... just 13.7% - in 2020. Moreover, not only the true saving rate is much lower than what you have suggested, an equally or even more important issue is that the majority of Americans do not have even have savings of just $1000 (69% in 2019!; I don't think it is significantly lower in 2021, especially ignoring one-time and temporary pandemic relief money) - I'm not even talking about retirement-level savings, which are orders of magnitude higher. These and other relevant numbers can be found in the following selected resources [1-5].

Before you say that personal cash savings do not reflect the full retirement savings situation because of 401k availability, I would mention that, based on Vanguard's 2020 research study, average and, especially, median 401k balances ($106,478 and $25,775, correspondingly) do not support this hypothesis [6].

[1] https://www.statista.com/topics/1134/personal-savings
[2] https://www.statista.com/statistics/246 ... ted-states
[3] https://time.com/nextadvisor/banking/sa ... te-soaring
[4] https://www.bea.gov/data/income-saving/ ... aving-rate
[5] https://spendmenot.com/blog/american-savings-statistics
[6] https://www.businessinsider.com/persona ... 1k-balance
He's referring to his home country in Asia, I believe, with the 30% savings rate.
Triple digit golfer
Posts: 10433
Joined: Mon May 18, 2009 5:57 pm

Re: Why can't we have another 20 years of bull market?

Post by Triple digit golfer »

hoops777 wrote: Sun Mar 21, 2021 5:21 pm
Scooter57 wrote: Sun Mar 21, 2021 4:59 pm
jumppilot wrote: Sun Mar 21, 2021 3:05 pm
Makes sense to me. If we have 5 years of a major downturn, it won’t matter how diversified your 60/40 portfolio is. People are going to be breaking into your house to steal your food.

If us lowly bogleheads have more money than the masses, that won’t protect you from the mob trying to physically hurt you. Try driving a new Corolla in Yemen.
You overestimate the impact of market downturns on most Americans. The people most affected would be young, highly paid corporate employees who assume their special status will last and retirees who expect luxurious lifestyles that could only be funded with S&P500 at 4000.

Outside of upscale suburbs people get by on far less than most people here think they need. Couples live decently on Social Security alone. Younger people live off small service businesses. People still need the roof fixed and the furnace repaired. People will still buy cookies and cupcakes. They will cut back on luxuries, but keep going. The pandemic hit our local jobs hard, but the communities are exceling themselves with food aid that is provided in respectful ways. The market has little to do with the jobs available to most people or their incomes.

Besides, if the market dropped 50% and stayed that way for 20 years, it would still be much higher than it was just a few years ago.

No need to invoke Yemen-like scenarios if the S&P 500 fell to 1950. Or even 1700.
Completely agree.
This is an investing forum so the general tone is that the stock market is crucial to most people’s lives. It would be interesting to know what pct of the American people would actually suffer if the market dropped 30 or 40 pct and stayed down for a good length of time.
I guarantee you at least 80 pct of adults have no idea about most of the investing topics on this forum.
Agreed. Most people work until they get Social Security and live largely off of it and/or a pension.

In fact, I'd bet that the switch from pensions to mostly 401ks will have a larger impact on the masses than a prolonged stock market crash, for the simple reason that most people don't invest at all or don't invest much anyway, so a crash wouldn't impact them greatly.
fingoals
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Joined: Thu Jan 24, 2019 5:43 pm

Re: Why can't we have another 20 years of bull market?

Post by fingoals »

Triple digit golfer wrote: Sun Mar 21, 2021 5:29 pm
fingoals wrote: Sun Mar 21, 2021 5:25 pm
KlangFool wrote: Sun Mar 21, 2021 4:13 pm
fingoals wrote: Sun Mar 21, 2021 3:21 pm
As for why some people are not prepared, well, there could be a whole host of factors that have been within as well as outside of their control that have influenced their life and prevented them from saving and/or investing any money. I realize that such people represent a minority of this forum's audience, however it is a rather sizeable subset of the population in the larger world.
fingoals,

The average gross saving rate of the country/community/culture that I came from is 30+%. This is for the whole country. It is the MAJORITY for that country.

KlangFool
I'm pretty sure that the above-mentioned number number for the average gross saving rate is based on recent spike from a combination of pandemic relief and significantly reduced spending due to coronavirus-related restrictions. The 30+% data point is clearly an outlier and, therefore, cannot be a foundation for the discussion on the subject for multi-year historical and future time periods.

If we consider historical (pre-pandemic) data for U.S., we will see a completely different picture: not only the average gross saving rate is around 6-8% (based on 2000-2020 data) with a spike of - wait for it ... just 13.7% - in 2020. Moreover, not only the true saving rate is much lower than what you have suggested, an equally or even more important issue is that the majority of Americans do not have even have savings of just $1000 (69% in 2019!; I don't think it is significantly lower in 2021, especially ignoring one-time and temporary pandemic relief money) - I'm not even talking about retirement-level savings, which are orders of magnitude higher. These and other relevant numbers can be found in the following selected resources [1-5].

Before you say that personal cash savings do not reflect the full retirement savings situation because of 401k availability, I would mention that, based on Vanguard's 2020 research study, average and, especially, median 401k balances ($106,478 and $25,775, correspondingly) do not support this hypothesis [6].

[1] https://www.statista.com/topics/1134/personal-savings
[2] https://www.statista.com/statistics/246 ... ted-states
[3] https://time.com/nextadvisor/banking/sa ... te-soaring
[4] https://www.bea.gov/data/income-saving/ ... aving-rate
[5] https://spendmenot.com/blog/american-savings-statistics
[6] https://www.businessinsider.com/persona ... 1k-balance
He's referring to his home country in Asia, I believe, with the 30% savings rate.
Thank you for pointing out, I missed that sentiment in his comment. Anyway, I think that it is pretty much irrelevant then, considering that this discussion thread is located in the "US Investors" section of the forum and, thus, focused on the relevant geography / jurisdiction.
KlangFool
Posts: 31525
Joined: Sat Oct 11, 2008 12:35 pm

Re: Why can't we have another 20 years of bull market?

Post by KlangFool »

fingoals wrote: Sun Mar 21, 2021 5:25 pm
KlangFool wrote: Sun Mar 21, 2021 4:13 pm
fingoals wrote: Sun Mar 21, 2021 3:21 pm
As for why some people are not prepared, well, there could be a whole host of factors that have been within as well as outside of their control that have influenced their life and prevented them from saving and/or investing any money. I realize that such people represent a minority of this forum's audience, however it is a rather sizeable subset of the population in the larger world.
fingoals,

The average gross saving rate of the country/community/culture that I came from is 30+%. This is for the whole country. It is the MAJORITY for that country.

KlangFool
I'm pretty sure that the above-mentioned number number for the average gross saving rate is based on recent spike from a combination of pandemic relief and significantly reduced spending due to coronavirus-related restrictions. The 30+% data point is clearly an outlier and, therefore, cannot be a foundation for the discussion on the subject for multi-year historical and future time periods.
fingoals,

You are wrong! There are many countries out there that save above 30+% consistently over many years.

https://www.investopedia.com/articles/p ... e-most.asp

https://www.ceicdata.com/en/indicator/s ... vings-rate

<<Singapore Gross Savings Rate was measured at 45.8 % in Dec 2020, compared with 44.2 % in the previous year. Singapore Gross Savings Rate is updated yearly, available from Dec 1960 to Dec 2020, with an average rate of 43.8 %. The data reached an all-time high of 52.7 % in Dec 1997 and a record low of -2.1 % in Dec 1960. CEIC calculates Gross National Savings Rate from annual Gross National Savings and annual Gross National Income. The Department of Statistics provides Gross National Savings in local currency and Gross National Income in local currency.>>

KlangFool
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fingoals
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Re: Why can't we have another 20 years of bull market?

Post by fingoals »

KlangFool wrote: Sun Mar 21, 2021 5:45 pm
fingoals wrote: Sun Mar 21, 2021 5:25 pm
KlangFool wrote: Sun Mar 21, 2021 4:13 pm
fingoals wrote: Sun Mar 21, 2021 3:21 pm
As for why some people are not prepared, well, there could be a whole host of factors that have been within as well as outside of their control that have influenced their life and prevented them from saving and/or investing any money. I realize that such people represent a minority of this forum's audience, however it is a rather sizeable subset of the population in the larger world.
fingoals,

The average gross saving rate of the country/community/culture that I came from is 30+%. This is for the whole country. It is the MAJORITY for that country.

KlangFool
I'm pretty sure that the above-mentioned number number for the average gross saving rate is based on recent spike from a combination of pandemic relief and significantly reduced spending due to coronavirus-related restrictions. The 30+% data point is clearly an outlier and, therefore, cannot be a foundation for the discussion on the subject for multi-year historical and future time periods.
fingoals,

You are wrong! There are many countries out there that save above 30+% consistently over many years.

https://www.investopedia.com/articles/p ... e-most.asp

https://www.ceicdata.com/en/indicator/s ... vings-rate

<<Singapore Gross Savings Rate was measured at 45.8 % in Dec 2020, compared with 44.2 % in the previous year. Singapore Gross Savings Rate is updated yearly, available from Dec 1960 to Dec 2020, with an average rate of 43.8 %. The data reached an all-time high of 52.7 % in Dec 1997 and a record low of -2.1 % in Dec 1960. CEIC calculates Gross National Savings Rate from annual Gross National Savings and annual Gross National Income. The Department of Statistics provides Gross National Savings in local currency and Gross National Income in local currency.>>

KlangFool
I'm happy for people living in those countries and being able to have a great saving rate. However ...

How is this relevant to me and other U.S. residents? This discussion thread is located in the "US Investors" section and, thus, I expect relevant focus.
KlangFool
Posts: 31525
Joined: Sat Oct 11, 2008 12:35 pm

Re: Why can't we have another 20 years of bull market?

Post by KlangFool »

fingoals wrote: Sun Mar 21, 2021 5:50 pm
KlangFool wrote: Sun Mar 21, 2021 5:45 pm
fingoals wrote: Sun Mar 21, 2021 5:25 pm
KlangFool wrote: Sun Mar 21, 2021 4:13 pm
fingoals wrote: Sun Mar 21, 2021 3:21 pm
As for why some people are not prepared, well, there could be a whole host of factors that have been within as well as outside of their control that have influenced their life and prevented them from saving and/or investing any money. I realize that such people represent a minority of this forum's audience, however it is a rather sizeable subset of the population in the larger world.
fingoals,

The average gross saving rate of the country/community/culture that I came from is 30+%. This is for the whole country. It is the MAJORITY for that country.

KlangFool
I'm pretty sure that the above-mentioned number number for the average gross saving rate is based on recent spike from a combination of pandemic relief and significantly reduced spending due to coronavirus-related restrictions. The 30+% data point is clearly an outlier and, therefore, cannot be a foundation for the discussion on the subject for multi-year historical and future time periods.
fingoals,

You are wrong! There are many countries out there that save above 30+% consistently over many years.

https://www.investopedia.com/articles/p ... e-most.asp

https://www.ceicdata.com/en/indicator/s ... vings-rate

<<Singapore Gross Savings Rate was measured at 45.8 % in Dec 2020, compared with 44.2 % in the previous year. Singapore Gross Savings Rate is updated yearly, available from Dec 1960 to Dec 2020, with an average rate of 43.8 %. The data reached an all-time high of 52.7 % in Dec 1997 and a record low of -2.1 % in Dec 1960. CEIC calculates Gross National Savings Rate from annual Gross National Savings and annual Gross National Income. The Department of Statistics provides Gross National Savings in local currency and Gross National Income in local currency.>>

KlangFool
I'm happy for people living in those countries and being able to have a great saving rate. However ...

How is this relevant to me and other U.S. residents? This discussion thread is located in the "US Investors" section and, thus, I expect relevant focus.
fingoals,

It is relevant because I save 1 year of expense every year in this country. I had been brain washed by that culture. Hence, it is possible for me to save at this rate in this country too. Ditto for many folks in my community living in this country. And, all over the world too.

KlangFool
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mrspock
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Re: Why can't we have another 20 years of bull market?

Post by mrspock »

Triple digit golfer wrote: Sun Mar 21, 2021 2:15 pm
mrspock wrote: Sun Mar 21, 2021 1:37 pm
Blue456 wrote: Sat Mar 20, 2021 11:26 am Everybody everywhere is talking about a bubble. But why can't we have another 20 years of bull market?
We absolutely can: earnings can rise (lowering PEs), new companies can bubble to the top of the S&P 500 (survivorship via kicking in) or growth rates of other investment options can be so poor relative to US equities, people are willing to pay more for them.
I see this a lot and don't really understand it. Can you explain it like I'm 5?

If people pay more for equities, doesn't that mean the returns are lower because they got less for their investment. Or you're saying PEs would just continue to rise in that scenario?
It depends what the other options are. Higher PEs relative to international *implies* lower future returns, but this has been true many times in the past and simply hasn’t materialized, as the other factors I mentioned did materialize.
Paradise
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Re: Why can't we have another 20 years of bull market?

Post by Paradise »

We can. I don’t think that we’re in a bear market until Bitcoin goes. That’s the first domino for sure like all other highly speculative assets.
50% VTI | 20% VXUS | 20% BND | 10% QQQ
fingoals
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Re: Why can't we have another 20 years of bull market?

Post by fingoals »

KlangFool wrote: Sun Mar 21, 2021 5:53 pm
fingoals wrote: Sun Mar 21, 2021 5:50 pm
KlangFool wrote: Sun Mar 21, 2021 5:45 pm
fingoals wrote: Sun Mar 21, 2021 5:25 pm
KlangFool wrote: Sun Mar 21, 2021 4:13 pm

fingoals,

The average gross saving rate of the country/community/culture that I came from is 30+%. This is for the whole country. It is the MAJORITY for that country.

KlangFool
I'm pretty sure that the above-mentioned number number for the average gross saving rate is based on recent spike from a combination of pandemic relief and significantly reduced spending due to coronavirus-related restrictions. The 30+% data point is clearly an outlier and, therefore, cannot be a foundation for the discussion on the subject for multi-year historical and future time periods.
fingoals,

You are wrong! There are many countries out there that save above 30+% consistently over many years.

https://www.investopedia.com/articles/p ... e-most.asp

https://www.ceicdata.com/en/indicator/s ... vings-rate

<<Singapore Gross Savings Rate was measured at 45.8 % in Dec 2020, compared with 44.2 % in the previous year. Singapore Gross Savings Rate is updated yearly, available from Dec 1960 to Dec 2020, with an average rate of 43.8 %. The data reached an all-time high of 52.7 % in Dec 1997 and a record low of -2.1 % in Dec 1960. CEIC calculates Gross National Savings Rate from annual Gross National Savings and annual Gross National Income. The Department of Statistics provides Gross National Savings in local currency and Gross National Income in local currency.>>

KlangFool
I'm happy for people living in those countries and being able to have a great saving rate. However ...

How is this relevant to me and other U.S. residents? This discussion thread is located in the "US Investors" section and, thus, I expect relevant focus.
fingoals,

It is relevant because I save 1 year of expense every year in this country. I had been brain washed by that culture. Hence, it is possible for me to save at this rate in this country too. Ditto for many folks in my community living in this country. And, all over the world too.

KlangFool
Oh, so you are an expat. Well, this is a special case then (perhaps, a relevant dedicated section is in order). Not everyone want to and/or can expatriate.
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JoeRetire
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Re: Why can't we have another 20 years of bull market?

Post by JoeRetire »

Blue456 wrote: Sat Mar 20, 2021 11:26 am Everybody everywhere is talking about a bubble. But why can't we have another 20 years of bull market?
We can.

The real question is if we will...
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jumppilot
Posts: 310
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Re: Why can't we have another 20 years of bull market?

Post by jumppilot »

Scooter57 wrote: Sun Mar 21, 2021 4:59 pm
jumppilot wrote: Sun Mar 21, 2021 3:05 pm
Makes sense to me. If we have 5 years of a major downturn, it won’t matter how diversified your 60/40 portfolio is. People are going to be breaking into your house to steal your food.

If us lowly bogleheads have more money than the masses, that won’t protect you from the mob trying to physically hurt you. Try driving a new Corolla in Yemen.
You overestimate the impact of market downturns on most Americans. The people most affected would be young, highly paid corporate employees who assume their special status will last and retirees who expect luxurious lifestyles that could only be funded with S&P500 at 4000.

Outside of upscale suburbs people get by on far less than most people here think they need. Couples live decently on Social Security alone. Younger people live off small service businesses. People still need the roof fixed and the furnace repaired. People will still buy cookies and cupcakes. They will cut back on luxuries, but keep going. The pandemic hit our local jobs hard, but the communities are exceling themselves with food aid that is provided in respectful ways. The market has little to do with the jobs available to most people or their incomes.

Besides, if the market dropped 50% and stayed that way for 20 years, it would still be much higher than it was just a few years ago.

No need to invoke Yemen-like scenarios if the S&P 500 fell to 1950. Or even 1700.
I’m not talking about a stock market downturn like 2009. Of course the average person doesn’t even know how to buy a mutual fund.

Perhaps Klang can clarify his point. That’s how I took it.
lostdog
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Re: Why can't we have another 20 years of bull market?

Post by lostdog »

It's true. Most people have no interest in the stock market.

We're a minority.
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hoops777
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Re: Why can't we have another 20 years of bull market?

Post by hoops777 »

KlangFool wrote: Sun Mar 21, 2021 5:53 pm
fingoals wrote: Sun Mar 21, 2021 5:50 pm
KlangFool wrote: Sun Mar 21, 2021 5:45 pm
fingoals wrote: Sun Mar 21, 2021 5:25 pm
KlangFool wrote: Sun Mar 21, 2021 4:13 pm

fingoals,

The average gross saving rate of the country/community/culture that I came from is 30+%. This is for the whole country. It is the MAJORITY for that country.

KlangFool
[/quote

I'm pretty sure that the above-mentioned number number for the average gross saving rate is based on recent spike from a combination of pandemic relief and significantly reduced spending due to coronavirus-related restrictions. The 30+% data point is clearly an outlier and, therefore, cannot be a foundation for the discussion on the subject for multi-year historical and future time periods.
fingoals,

You are wrong! There are many countries out there that save above 30+% consistently over many years.

https://www.investopedia.com/articles/p ... e-most.asp

https://www.ceicdata.com/en/indicator/s ... vings-rate

<<Singapore Gross Savings Rate was measured at 45.8 % in Dec 2020, compared with 44.2 % in the previous year. Singapore Gross Savings Rate is updated yearly, available from Dec 1960 to Dec 2020, with an average rate of 43.8 %. The data reached an all-time high of 52.7 % in Dec 1997 and a record low of -2.1 % in Dec 1960. CEIC calculates Gross National Savings Rate from annual Gross National Savings and annual Gross National Income. The Department of Statistics provides Gross National Savings in local currency and Gross National Income in local currency.>>

KlangFool
I'm happy for people living in those countries and being able to have a great saving rate. However ...

How is this relevant to me and other U.S. residents? This discussion thread is located in the "US Investors" section and, thus, I expect relevant focus.
fingoals,

It is relevant because I save 1 year of expense every year in this country. I had been brain washed by that culture. Hence, it is possible for me to save at this rate in this country too. Ditto for many folks in my community living in this country. And, all over the world too.

KlangFool
I have seen you post this countless times. It is a bit more complex than you make it. Life is not the same in different countries and cultures.
Obviously many are fine sacrificing a lot of things to save money. A lot of people do not want to live that way and would rather take their kids to Disneyland or whatever. No right or wrong. A choice.
Regardless, there is a huge pct of people in the USA that cannot save 30 pct even if they wanted to. I had a 5 year period of my life when single that I could not save anything unless I wanted to get evicted or not eat.
Your circumstances and salary are far different than probably 90 pct of the country.
Many Asian cultures are more focused on long term goals and delayed gratification and less on individualism. The American culture is focused much more on individualism. Again,no right or wrong. It is what it is.
K.I.S.S........so easy to say so difficult to do.
retire2022
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Re: Why can't we have another 20 years of bull market?

Post by retire2022 »

arcticpineapplecorp. wrote: Sun Mar 21, 2021 2:40 pm
retire2022 wrote: Sat Mar 20, 2021 11:39 am
Blue456 wrote: Sat Mar 20, 2021 11:26 am Everybody everywhere is talking about a bubble. But why can't we have another 20 years of bull market?
Blue456

You want stock market crashes, crashes are good, Warren Buffet said crashes allowed him to buy more shares. A mix of Bull/Bear Markets are good for investors, embrace crashes.

I went through five crashes and fully funded 457/Roth IRA starting with 1987 crash, 2000, 2008, 2018, and 2020, my portfolio is 2.2 million.
if you're gonna use 2020 because the market fell 32% in one month (feb-mar) and 2018 because the market fell 20% in the 4th quarter, then we should probably include other years as well in which the year didn't end down (like 2020, but unlike 2018), but the market still fell during the year. Some examples would be:

2009 (fell 25% between 1/1/2009-3/9/3009)
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

and 2011 (lost 19% intra year)
2001 lost 30% intra year
2002 lost 34% intra year
1990 lost 20% intra year

source:
Image
Nice graph

Look at my profile basically 34 years of investing in 457/IRA/Roth IRA even though has not been updated approx 600k invested and currently 2.28 million

https://imgur.com/a/rkPU6wv

https://imgur.com/a/Gi5VKcO my 457 account rolling in the dough DCA
Trader Joe
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Re: Why can't we have another 20 years of bull market?

Post by Trader Joe »

"Why can't we have another 20 years of bull market?"

There is no real reason that we cannot.
latesaver
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Re: Why can't we have another 20 years of bull market?

Post by latesaver »

Scooter57 wrote: Sat Mar 20, 2021 3:58 pm The only way we could have 20 years of mostly bull market with no severe corrections would be if people completely abandoned the idea that the price of a stock was related to the earnings of the company issuing that stock, turning the stock market into a perpetual Ponzi scheme where new investors are constantly recruited to put more money in so that existing holders can sell their shares at a profit.

That could happen. It may be happening now, as there is less and less relationship of the prices of stocks dominating the market to the earnings of the companies issuing the stock. Many stocks, like Amazon or Tesla offer stockholders neither dividends or the possibility of profiting from receiving a portion of the proceeds of the sale of the company in the future company. Whatever the company's earnings. You aren't promised any share of it. Only the hope that the hype that surrounds the company will allow you to sell your stock to someone willing to pay a lot more. Any company with negative earnings (i.e. ones losing money) or with Price/earnings ratios up near 100 or in the case of Tesla 1000 is being traded on principles that have nothing to do with the old fashioned concept that when you buy a stock you are an owner and entitled to a share of the company's earnings.

There is also the problem that the fundamental principles of free market capitalism require that companies that don't run their businesses be allowed to fail and more robust companies survive and grow. Government interventions increasingly allow companies to continue borrowing very cheap money while constantly creating new shares of stock, even when losing money year in and year out. These companies continue to pay executives inflated salaries no matter how poorly the underlying business is being managed. The fear of upsetting the market has been dictating policy for the last decade and could continue. The question is whether that would be enough to keep the "zombie" companies going and entice in those new investors whose stock buying is essential to keep prices rising.

Markets change over the decades. I feel that way too much of what you read about what the market will do assumes that what happened over past decades can somehow tell us what will happen in the future. That may be a dangerous mistake.

You are much better off accepting that you can't know what will happen. You should invest with the awareness that the money you invest could drop in value and stay low for quite a while. It could also make you money. But you do NOT know what the odds are. You are gambling blind, hoping that past performance predicts future performance, even though every brokerage constantly posts on its websites and in its correspondence that you should understand that this simply is not true.
why is the bolded excerpt relevant?

have you ever looked at a chart of the broad US equity market (S&P 500, etc.) over the last 40+ years? i wouldn't say i am gambling blind investing regularly over years and years into low cost index funds...
latesaver
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Re: Why can't we have another 20 years of bull market?

Post by latesaver »

Scooter57 wrote: Sat Mar 20, 2021 3:58 pm The only way we could have 20 years of mostly bull market with no severe corrections would be if people completely abandoned the idea that the price of a stock was related to the earnings of the company issuing that stock, turning the stock market into a perpetual Ponzi scheme where new investors are constantly recruited to put more money in so that existing holders can sell their shares at a profit.

That could happen. It may be happening now, as there is less and less relationship of the prices of stocks dominating the market to the earnings of the companies issuing the stock. Many stocks, like Amazon or Tesla offer stockholders neither dividends or the possibility of profiting from receiving a portion of the proceeds of the sale of the company in the future company. Whatever the company's earnings. You aren't promised any share of it. Only the hope that the hype that surrounds the company will allow you to sell your stock to someone willing to pay a lot more. Any company with negative earnings (i.e. ones losing money) or with Price/earnings ratios up near 100 or in the case of Tesla 1000 is being traded on principles that have nothing to do with the old fashioned concept that when you buy a stock you are an owner and entitled to a share of the company's earnings.

There is also the problem that the fundamental principles of free market capitalism require that companies that don't run their businesses be allowed to fail and more robust companies survive and grow. Government interventions increasingly allow companies to continue borrowing very cheap money while constantly creating new shares of stock, even when losing money year in and year out. These companies continue to pay executives inflated salaries no matter how poorly the underlying business is being managed. The fear of upsetting the market has been dictating policy for the last decade and could continue. The question is whether that would be enough to keep the "zombie" companies going and entice in those new investors whose stock buying is essential to keep prices rising.

Markets change over the decades. I feel that way too much of what you read about what the market will do assumes that what happened over past decades can somehow tell us what will happen in the future. That may be a dangerous mistake.

You are much better off accepting that you can't know what will happen. You should invest with the awareness that the money you invest could drop in value and stay low for quite a while. It could also make you money. But you do NOT know what the odds are. You are gambling blind, hoping that past performance predicts future performance, even though every brokerage constantly posts on its websites and in its correspondence that you should understand that this simply is not true.
why is the bolded excerpt relevant?

have you ever looked at a chart of the broad US equity market (S&P 500, etc.) over the last 40+ years? i wouldn't say i am gambling blind investing regularly over years and years into low cost index funds...
Wanderingwheelz
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Re: Why can't we have another 20 years of bull market?

Post by Wanderingwheelz »

lostdog wrote: Sun Mar 21, 2021 6:23 pm It's true. Most people have no interest in the stock market.

We're a minority.
How nice would that be?
Being wrong compounds forever.
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Re: Why can't we have another 20 years of bull market?

Post by stocknoob4111 »

because valuations are peaked and the markets are in a dysfunctional state with manic amounts of artificial liquidity driving rampant speculative behavior... historically this has preceded major market meltdowns and many think if history is a guide that should be imminently happening. My personal thoughts are that this goes on for another year or two then we have another lost decade where everything deleverages 2023-33
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Re: Why can't we have another 20 years of bull market?

Post by watchnerd »

stocknoob4111 wrote: Sun Mar 21, 2021 8:28 pm because valuations are peaked and the markets are in a dysfunctional state with manic amounts of artificial liquidity driving rampant speculative behavior... historically this has preceded major market meltdowns and many think if history is a guide that should be imminently happening. My personal thoughts are that this goes on for another year or two then we have another lost decade where everything deleverages 2023-33
It's really just a debate about where we are right now in the cycle

Image
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Re: Why can't we have another 20 years of bull market?

Post by z3r0c00l »

watchnerd wrote: Sun Mar 21, 2021 10:42 pm
stocknoob4111 wrote: Sun Mar 21, 2021 8:28 pm because valuations are peaked and the markets are in a dysfunctional state with manic amounts of artificial liquidity driving rampant speculative behavior... historically this has preceded major market meltdowns and many think if history is a guide that should be imminently happening. My personal thoughts are that this goes on for another year or two then we have another lost decade where everything deleverages 2023-33
It's really just a debate about where we are right now in the cycle
I might posit that it hasn't been established that market cycles like this actually exist or that they are similar enough to provide useful information. It is very tempting to read auguries in something fractal like the stock market. But just because small, medium, and long spans of time show similar shapes and patterns, that doesn't mean we can use them to predict what comes next. We went sideways from 2000-2013 after going up steadily from 1982-2000. It is entirely plausible, maybe even likely, that we will see a run that goes through 2030, a so called secular bull. Giri Devulapally proposed as much in the article below. I don't have any confidence in this prediction except, allowing that it is possible and even mathematically likely, I fear missing out on 100-300% returns more than riding out a rough patch. To paraphrase a line from Zero Dark Thirty, "how do you evaluate the risk of *not* doing something?" If you get 2-3 good markets during your investing lifetime, missing just one could be the difference between a beach house and a motel by the beach.

https://am.jpmorgan.com/blob-gim/138363 ... 20_r2.pdf
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JackoC
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Re: Why can't we have another 20 years of bull market?

Post by JackoC »

MotoTrojan wrote: Sat Mar 20, 2021 11:53 am Most of the great bull markets were due to low starting valuations which provide a tailwind. While you can also get a bull by having huge economic growth (the E get's bigger rather than the P in P/E causing expansion), the fact that valuations today are so high is a headwind (essentially people are already pricing in that growth).

Can prices go up for 20 years, never lower than today? Absolutely. Is it unlikely that overall returns are 10, 12, 15% CAGR? Absolutely. Valuations in the US are quite high right now so it would require massive earnings growth, or a crash. That doesn't mean it is a bubble or bound to crash, just that forward returns don't look as exciting as they have in the past.

For what it is worth, equities outside the US and deep-value is priced lower and probably the place to look to catch the next bull. But nobody knows...
I also rate this the best summary of the thread. People who think valuations are irrelevant, or make arguments that constructively amount to that, are kidding themselves IMO. However recognizing that valuations matter does not then impart magical predictive ability of future realized return.

The expected return of US stocks appears now significantly lower than the long term (multi decade) historical realized return. It's also lower than the realized return of the last 20 yrs (though not as much as was pointed out, 100 yrs ~7.6% real, past 20 yrs ~5.3%, 1/CAPE now as rough estimate of the real expected return, ~2.8%). Which doesn't rule out realized return being higher than the long term historical average next 20 yrs. But, if you think outcomes that far above the apparent expected return are pretty likely, and don't think the market is stupid, you probably have to accept that realized outcomes that far below the expected return are pretty likely too, and that would be uglier now since the expected return is lower. IOW valuations are a somewhat useful indicator of expected return but it's a separate debate whether expected variance now is higher or lower than historical realized and harder to even estimate. One might argue qualitatively that a lower expected variance is congruent with a lower expected return: stock valuations may be higher now in part *because* there's less uncertainty (things are generally more transparent now, one might hypothesize). Or, you might try to measure it in terms of current index option prices, but hard to do that with easy to get information past relatively short option maturities (VIX now is a bit higher than its historical average, but it's only a one month indicator with only a few decade history) and various potentially valid objections might be raised about any data you could get about much longer term options as unbiased indicators of expected long term variance.
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Re: Why can't we have another 20 years of bull market?

Post by Triple digit golfer »

watchnerd wrote: Sun Mar 21, 2021 10:42 pm
stocknoob4111 wrote: Sun Mar 21, 2021 8:28 pm because valuations are peaked and the markets are in a dysfunctional state with manic amounts of artificial liquidity driving rampant speculative behavior... historically this has preceded major market meltdowns and many think if history is a guide that should be imminently happening. My personal thoughts are that this goes on for another year or two then we have another lost decade where everything deleverages 2023-33
It's really just a debate about where we are right now in the cycle

Image
It feels like we're somewhere between thrill and euphoria.
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Re: Why can't we have another 20 years of bull market?

Post by watchnerd »

Triple digit golfer wrote: Mon Mar 22, 2021 9:26 am It feels like we're somewhere between thrill and euphoria.
Feels like that to me, too.
Global stocks, IG/HY bonds, gold & digital assets at market weights 75% / 19% / 6% || LMP: TIPS ladder
lostdog
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Re: Why can't we have another 20 years of bull market?

Post by lostdog »

watchnerd wrote: Mon Mar 22, 2021 9:29 am
Triple digit golfer wrote: Mon Mar 22, 2021 9:26 am It feels like we're somewhere between thrill and euphoria.
Feels like that to me, too.
Optimism.

None of my non-investing friends are talking about the stock market.

When they start talking about it, I'll start worrying.
Stocks-80% || Bonds-20% || Taxable-VTI/VXUS || IRA-VT/BNDW
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Re: Why can't we have another 20 years of bull market?

Post by nigel_ht »

bitdocmd wrote: Sun Mar 21, 2021 3:49 pm
KlangFool wrote: Sun Mar 21, 2021 2:57 pm
bitdocmd wrote: Sun Mar 21, 2021 2:47 pm
KlangFool wrote: Sat Mar 20, 2021 7:49 pm
Rat_Race wrote: Sat Mar 20, 2021 7:20 pm
If the Fed decides to print $100T and buy everything, yes we can have 20 years of bull "market" (if you really want to call it that). Who would stop them?
My physical Gold/Silver will be worth a lot more than what it is now.

KlangFool
Fascinating that you are into gold but not a fan of owning real estate.
How do you carry your real estate with you when you need to leave the country?

KlangFool
Fair point. How do you carry gold with you when you need to leave the country?

bitdocmd
If you are rich enough you have real estate in a different country and use the gold to get out of dodge.
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Re: Why can't we have another 20 years of bull market?

Post by nigel_ht »

lostdog wrote: Mon Mar 22, 2021 10:41 am
watchnerd wrote: Mon Mar 22, 2021 9:29 am
Triple digit golfer wrote: Mon Mar 22, 2021 9:26 am It feels like we're somewhere between thrill and euphoria.
Feels like that to me, too.
Optimism.

None of my non-investing friends are talking about the stock market.

When they start talking about it, I'll start worrying.
WSB is the counterargument...another vote for somewhere between thrill and euphoria...
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Re: Why can't we have another 20 years of bull market?

Post by nigel_ht »

z3r0c00l wrote: Mon Mar 22, 2021 7:42 am
watchnerd wrote: Sun Mar 21, 2021 10:42 pm
stocknoob4111 wrote: Sun Mar 21, 2021 8:28 pm because valuations are peaked and the markets are in a dysfunctional state with manic amounts of artificial liquidity driving rampant speculative behavior... historically this has preceded major market meltdowns and many think if history is a guide that should be imminently happening. My personal thoughts are that this goes on for another year or two then we have another lost decade where everything deleverages 2023-33
It's really just a debate about where we are right now in the cycle
I might posit that it hasn't been established that market cycles like this actually exist or that they are similar enough to provide useful information. It is very tempting to read auguries in something fractal like the stock market. But just because small, medium, and long spans of time show similar shapes and patterns, that doesn't mean we can use them to predict what comes next. We went sideways from 2000-2013 after going up steadily from 1982-2000. It is entirely plausible, maybe even likely, that we will see a run that goes through 2030, a so called secular bull. Giri Devulapally proposed as much in the article below. I don't have any confidence in this prediction except, allowing that it is possible and even mathematically likely, I fear missing out on 100-300% returns more than riding out a rough patch. To paraphrase a line from Zero Dark Thirty, "how do you evaluate the risk of *not* doing something?" If you get 2-3 good markets during your investing lifetime, missing just one could be the difference between a beach house and a motel by the beach.

https://am.jpmorgan.com/blob-gim/138363 ... 20_r2.pdf
I may not be able to recognize euphoria with any great accuracy but I'm pretty sure that when stocks are down 80% that it's a great time to buy...
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Re: Why can't we have another 20 years of bull market?

Post by z3r0c00l »

nigel_ht wrote: Mon Mar 22, 2021 11:12 am
I may not be able to recognize euphoria with any great accuracy but I'm pretty sure that when stocks are down 80% that it's a great time to buy...
Very true, but with what money? I love buying new stocks with the bi-weekly 401K contributions when things are low. But keeping dry powder out of the market waiting for an 80% drop (which happened once in the past century) is more likely to cost you money than make you money. You can't know when the right time is to sell or buy. Is it -50% when you plow in? Or is it just a bump and -20% is the bottom? Only looking backwards can people graph the numbers and point to dips and crests and say "See, it was a market cycle." I would love to see someone put up an empirical model of business cycles that can hindcast let alone predict future cycles.
Last edited by z3r0c00l on Mon Mar 22, 2021 11:20 am, edited 3 times in total.
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mptfan
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Re: Why can't we have another 20 years of bull market?

Post by mptfan »

Blue456 wrote: Sat Mar 20, 2021 11:26 am Everybody everywhere is talking about a bubble. But why can't we have another 20 years of bull market?
Who said we can't? And how do you define "bull market?"
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Re: Why can't we have another 20 years of bull market?

Post by firebirdparts »

Triple digit golfer wrote: Mon Mar 22, 2021 9:26 am It feels like we're somewhere between thrill and euphoria.
Yes it does. I think there will be a big reopening rally before the euphoria ends.
This time is the same
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Re: Why can't we have another 20 years of bull market?

Post by Caduceus »

You can if the underlying businesses themselves improve significantly. Stocks are fractional interests in real businesses, and over long periods of time, short of a dramatic expansion in the multiple (e.g. if the P/E multiple in 20 years rises to 50 from its current 35, which is unlikely), you will do as well as the underlying businesses themselves do.

There's also a good reason to think that the P/E multiple will fall if interest rates go up, since investors will demand a higher return from all assets, including stocks, so that's one argument against another 20 years of a bull market.

You can look at it from a "micro" level as well. I don't think I've ever seen quite that many overvalued businesses ever since I started researching companies. Almost every financial statement I pick up from an interesting company suggests that its stock is overvalued by a very long shot.

I happen to think it's a very challenging time to invest, and that future expected returns from owning the total US stock market is going to be quite low.
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Re: Why can't we have another 20 years of bull market?

Post by nigel_ht »

fingoals wrote: Sun Mar 21, 2021 5:50 pm
KlangFool wrote: Sun Mar 21, 2021 5:45 pm
fingoals wrote: Sun Mar 21, 2021 5:25 pm
KlangFool wrote: Sun Mar 21, 2021 4:13 pm
fingoals wrote: Sun Mar 21, 2021 3:21 pm
As for why some people are not prepared, well, there could be a whole host of factors that have been within as well as outside of their control that have influenced their life and prevented them from saving and/or investing any money. I realize that such people represent a minority of this forum's audience, however it is a rather sizeable subset of the population in the larger world.
fingoals,

The average gross saving rate of the country/community/culture that I came from is 30+%. This is for the whole country. It is the MAJORITY for that country.

KlangFool
I'm pretty sure that the above-mentioned number number for the average gross saving rate is based on recent spike from a combination of pandemic relief and significantly reduced spending due to coronavirus-related restrictions. The 30+% data point is clearly an outlier and, therefore, cannot be a foundation for the discussion on the subject for multi-year historical and future time periods.
fingoals,

You are wrong! There are many countries out there that save above 30+% consistently over many years.

https://www.investopedia.com/articles/p ... e-most.asp

https://www.ceicdata.com/en/indicator/s ... vings-rate

<<Singapore Gross Savings Rate was measured at 45.8 % in Dec 2020, compared with 44.2 % in the previous year. Singapore Gross Savings Rate is updated yearly, available from Dec 1960 to Dec 2020, with an average rate of 43.8 %. The data reached an all-time high of 52.7 % in Dec 1997 and a record low of -2.1 % in Dec 1960. CEIC calculates Gross National Savings Rate from annual Gross National Savings and annual Gross National Income. The Department of Statistics provides Gross National Savings in local currency and Gross National Income in local currency.>>

KlangFool
I'm happy for people living in those countries and being able to have a great saving rate. However ...

How is this relevant to me and other U.S. residents? This discussion thread is located in the "US Investors" section and, thus, I expect relevant focus.
Unless your income is very large it is unlikely that you will reach financial independence in the US without a high savings rate. That is very relevant for US investors hoping to have a better retirement.

For FIRE folks 30%+ seems very common with 50%+ not uncommon when folks have reasonably high incomes (ie engineers, software folks, etc). Whether you actually retire early is irrelevant. That the average in Singapore is 40%+ implies that more folks in the US COULD save at these higher rates if they were inclined to...
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Re: Why can't we have another 20 years of bull market?

Post by nigel_ht »

z3r0c00l wrote: Mon Mar 22, 2021 11:18 am
nigel_ht wrote: Mon Mar 22, 2021 11:12 am
I may not be able to recognize euphoria with any great accuracy but I'm pretty sure that when stocks are down 80% that it's a great time to buy...
Very true, but with what money? I love buying new stocks with the bi-weekly 401K contributions when things are low. But keeping dry powder out of the market waiting for an 80% drop (which happened once in the past century) is more likely to cost you money than make you money. You can't know when the right time is to sell or buy. Is it -50% when you plow in? Or is it just a bump and -20% is the bottom? Only looking backwards can people graph the numbers and point to dips and crests and say "See, it was a market cycle." I would love to see someone put up an empirical model of business cycles that can hindcast let alone predict future cycles.
Early to mid career I'd just stay 90/10 the whole way. Maybe go 100/0 after a big drop.

But yes, if you are already 100/0 there's no dry power to be had other than perhaps your EF. I wouldn't put my EF in...

Late career with a 60/40 AA closer to retirement...well you just took a fairy huge bath and risks are much lower so going 80/20 or 90/10 at that point means you likely catch more upswing.
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Re: Why can't we have another 20 years of bull market?

Post by BabaWawa »

retire2022 wrote: Sat Mar 20, 2021 11:39 am
Blue456 wrote: Sat Mar 20, 2021 11:26 am Everybody everywhere is talking about a bubble. But why can't we have another 20 years of bull market?
Blue456

You want stock market crashes, crashes are good, Warren Buffet said crashes allowed him to buy more shares. A mix of Bull/Bear Markets are good for investors, embrace crashes.

I went through five crashes and fully funded 457/Roth IRA starting with 1987 crash, 2000, 2008, 2018, and 2020, my portfolio is 2.2 million.
I had that same healthy attitude during our accumulation phase. Now in retirement withdrawal phase, without new money to invest, I no longer enjoy crashes or pullbacks.
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Re: Why can't we have another 20 years of bull market?

Post by z3r0c00l »

nigel_ht wrote: Mon Mar 22, 2021 11:40 am
z3r0c00l wrote: Mon Mar 22, 2021 11:18 am
nigel_ht wrote: Mon Mar 22, 2021 11:12 am
I may not be able to recognize euphoria with any great accuracy but I'm pretty sure that when stocks are down 80% that it's a great time to buy...
Very true, but with what money? I love buying new stocks with the bi-weekly 401K contributions when things are low. But keeping dry powder out of the market waiting for an 80% drop (which happened once in the past century) is more likely to cost you money than make you money. You can't know when the right time is to sell or buy. Is it -50% when you plow in? Or is it just a bump and -20% is the bottom? Only looking backwards can people graph the numbers and point to dips and crests and say "See, it was a market cycle." I would love to see someone put up an empirical model of business cycles that can hindcast let alone predict future cycles.
Early to mid career I'd just stay 90/10 the whole way. Maybe go 100/0 after a big drop.

But yes, if you are already 100/0 there's no dry power to be had other than perhaps your EF. I wouldn't put my EF in...

Late career with a 60/40 AA closer to retirement...well you just took a fairy huge bath and risks are much lower so going 80/20 or 90/10 at that point means you likely catch more upswing.
I still posit that these kinds of tactical AA changes are more likely to result in mistakes, e.g. rebalancing too early or late.
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lostdog
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Re: Why can't we have another 20 years of bull market?

Post by lostdog »

nigel_ht wrote: Mon Mar 22, 2021 11:09 am
lostdog wrote: Mon Mar 22, 2021 10:41 am
watchnerd wrote: Mon Mar 22, 2021 9:29 am
Triple digit golfer wrote: Mon Mar 22, 2021 9:26 am It feels like we're somewhere between thrill and euphoria.
Feels like that to me, too.
Optimism.

None of my non-investing friends are talking about the stock market.

When they start talking about it, I'll start worrying.
WSB is the counterargument...another vote for somewhere between thrill and euphoria...
That is concentrated on some single stocks.
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Re: Why can't we have another 20 years of bull market?

Post by nigel_ht »

KlangFool wrote: Sun Mar 21, 2021 4:22 pm
fingoals wrote: Sun Mar 21, 2021 3:21 pm
KlangFool wrote: Sat Mar 20, 2021 12:09 pm OP,

Yes, we could. Vice versa, we could have 20 years of bear market too. So, why does any of this matters? It does not.

The only relevant question is are you prepared?

A) If we have 20 years of bull market, you will be fine.

B) If we have 20 years of bear market, you are fine too.

If you are prepared, it won't matter to you. If you are not, why are you not prepared? Isn't that more important than hoping we can predict the future?

Are you prepared?

KlangFool
Sorry, but the emphasized statement above is true only under several implied assumptions:
fingoals,

Open your mind and let it be free. Just because you cannot be fully prepared for 20 years of bear market, it does not mean you cannot do something now to be prepared. There is a big space between doing nothing and fully prepared for 20 years.

KlangFool
The opportunity cost of preparing for outliers can be quite high. The ROI of fully preparing for a 20 year bear market is likely very very negative.

However, as you point out, the equation for minorities is sometimes very different than for the dominant race/culture in a country.

For folks that would argue that the US is different from Indonesia, which KF alluded to in the comment about the Asian Financial Crisis, I might be inclined to agree if my dad wasn't born in Poston, Az. Also known as the Poston Internment Camp. It's not paranoia if something has actually happened to members of your immediate family.

So financial planning and risk assessments are very much a product of your personal and family experiences.
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Re: Why can't we have another 20 years of bull market?

Post by watchnerd »

Caduceus wrote: Mon Mar 22, 2021 11:23 am There's also a good reason to think that the P/E multiple will fall if interest rates go up, since investors will demand a higher return from all assets, including stocks, so that's one argument against another 20 years of a bull market.
Yes, and this is logical.

But....

A few things make valuation comparisons to the past tough:

1. Accounting rules post-2001 changed earnings reporting such that things like CAPE 10 aren't normalized before and after

2. If, for secular macro economic and monetary policy reasons, we don't won't see inflation persist much above 3% for any length of time (and some economics believe that's the world we're in now), then interest rates may remain low for a long, long time compared to what they were in the past, making valuations comparisons to what was normal in the 20th century difficult.
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Re: Why can't we have another 20 years of bull market?

Post by nigel_ht »

lostdog wrote: Mon Mar 22, 2021 12:05 pm
nigel_ht wrote: Mon Mar 22, 2021 11:09 am
lostdog wrote: Mon Mar 22, 2021 10:41 am
watchnerd wrote: Mon Mar 22, 2021 9:29 am
Triple digit golfer wrote: Mon Mar 22, 2021 9:26 am It feels like we're somewhere between thrill and euphoria.
Feels like that to me, too.
Optimism.

None of my non-investing friends are talking about the stock market.

When they start talking about it, I'll start worrying.
WSB is the counterargument...another vote for somewhere between thrill and euphoria...
That is concentrated on some single stocks.
I was thinking more in terms of WSB being the modern equivalent of the shoe shine boy...
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Re: Why can't we have another 20 years of bull market?

Post by lostdog »

When most bogleheads start being optimistic, then we'll have a crash.

For now, most are worried. That means our new bull market will last for awhile.
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Re: Why can't we have another 20 years of bull market?

Post by watchnerd »

lostdog wrote: Mon Mar 22, 2021 12:11 pm When most bogleheads start being optimistic, then we'll have a crash.

For now, most are worried. That means our new bull market will last for awhile.
Bogleheads aren't supposed to have emotions about the market.

Ergo, being optimistic makes you not a Boglehead.

;)
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Re: Why can't we have another 20 years of bull market?

Post by nigel_ht »

z3r0c00l wrote: Mon Mar 22, 2021 11:54 am
nigel_ht wrote: Mon Mar 22, 2021 11:40 am
z3r0c00l wrote: Mon Mar 22, 2021 11:18 am
nigel_ht wrote: Mon Mar 22, 2021 11:12 am
I may not be able to recognize euphoria with any great accuracy but I'm pretty sure that when stocks are down 80% that it's a great time to buy...
Very true, but with what money? I love buying new stocks with the bi-weekly 401K contributions when things are low. But keeping dry powder out of the market waiting for an 80% drop (which happened once in the past century) is more likely to cost you money than make you money. You can't know when the right time is to sell or buy. Is it -50% when you plow in? Or is it just a bump and -20% is the bottom? Only looking backwards can people graph the numbers and point to dips and crests and say "See, it was a market cycle." I would love to see someone put up an empirical model of business cycles that can hindcast let alone predict future cycles.
Early to mid career I'd just stay 90/10 the whole way. Maybe go 100/0 after a big drop.

But yes, if you are already 100/0 there's no dry power to be had other than perhaps your EF. I wouldn't put my EF in...

Late career with a 60/40 AA closer to retirement...well you just took a fairy huge bath and risks are much lower so going 80/20 or 90/10 at that point means you likely catch more upswing.
I still posit that these kinds of tactical AA changes are more likely to result in mistakes, e.g. rebalancing too early or late.
I am 5ish years to retirement. If we suffered a 50% downturn in the market over the course of 2022 my losses would be in the mid six figures even at 50/50. If I wanted to retire with the same amount as I have today my best bet is going 80/20 even if the market proceeded to -80%.

Now that's probably a bad move in the event of a Nikkei crash but the assumption in the forums is a Nikkei crash is more or less impossible to the US. I more or less agree as long as we are a superpower with reserve currency status.
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Re: Why can't we have another 20 years of bull market?

Post by watchnerd »

nigel_ht wrote: Mon Mar 22, 2021 12:17 pm I am 5ish years to retirement. If we suffered a 50% downturn in the market over the course of 2022 my losses would be in the mid six figures even at 50/50. If I wanted to retire with the same amount as I have today my best bet is going 80/20 even if the market proceeded to -80%.

Now that's probably a bad move in the event of a Nikkei crash but the assumption in the forums is a Nikkei crash is more or less impossible to the US. I more or less agree as long as we are a superpower with reserve currency status.
My IPS basically says I have the option of doing something similar in that scenario.

Given we have no debt/no mortgage, and enough short TIPS and pre-funded LMP ladder to fund cover baseline living expenses to age 62 (11 years in my future), I'd feel pretty comfortable with that.
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Re: Why can't we have another 20 years of bull market?

Post by retire2022 »

BabaWawa wrote: Mon Mar 22, 2021 11:43 am
I had that same healthy attitude during our accumulation phase. Now in retirement withdrawal phase, without new money to invest, I no longer enjoy crashes or pullbacks.
BabaWawa

I am different circumstance, I am sitting on 2.28 million portfolio and 100K in cash, or 45x times expenses saved, or 95/5 AA

I have 100K in cash and will withdraw for living expenses, when I retire this summer 2021 at 61 years old with 35 years of state service.

I expect to have a pension 66K and could take Social Security at 62 or wait at 70 at 38K.

I could grow my portfolio at 3% return and still be at 3 million. I have brass balls and could take a hit, which I done previously in prior crashes.
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Re: Why can't we have another 20 years of bull market?

Post by Scooter57 »

latesaver wrote: Sun Mar 21, 2021 7:54 pm
Scooter57 wrote: Sat Mar 20, 2021 3:58 pm
That could happen. It may be happening now, as there is less and less relationship of the prices of stocks dominating the market to the earnings of the companies issuing the stock. Many stocks, like Amazon or Tesla offer stockholders neither dividends or the possibility of profiting from receiving a portion of the proceeds of the sale of the company in the future company. Whatever the company's earnings. You aren't promised any share of it. Only the hope that the hype that surrounds the company will allow you to sell your stock to someone willing to pay a lot more. Any company with negative earnings (i.e. ones losing money) or with Price/earnings ratios up near 100 or in the case of Tesla 1000 is being traded on principles that have nothing to do with the old fashioned concept that when you buy a stock you are an owner and entitled to a share of the company's earnings.
why is the bolded excerpt relevant?

have you ever looked at a chart of the broad US equity market (S&P 500, etc.) over the last 40+ years? i wouldn't say i am gambling blind investing regularly over years and years into low cost index funds...
The bolded phrase is relevant because the whole idea behind companies issuing shares of their enterprise, and investors buying those shares, going back to the 1600s, is that owning shares allows you to share in the company's profits. The two ways you can do this is by getting a piece of the company's profits that is proportional to your share of ownership--dividends--or getting a proportional share of the proceeds when the company is sold.

That is why traditional standard stock analysis focused on the ability of a company to produce earnings and profits, in which investors would share. It is also why investors looked for companies whose share prices were priced at a level that allowed them to buy a share of those earnings relatively cheaply. There are still investors who invest that way, but over the past 30 years there has been a gradual, but recently accelerating, shift in what investors expect from their stocks.

I can almost hear the cries of "OK Boomer!" in response to such an antiquated way of thinking about what buying stock might mean.

Now it has become common for investors to expect nothing from their ownership of a share of stock (or an ETF) except that they will be able to sell it to someone for more than they paid for it. Amazon which has never paid a dividend in 23+ years and says it won't pay a dividend and Tesla, whose share price is more than 1000 times higher than its earnings, offer you nothing more than the chance to sell your share in their enterprises for more than you paid for it.

Owning something whose price keeps going up daily, because buyers have discovered they can get more for it than they paid for it works very well as long as the prices keep going up. I sold a Beanie Baby acquired for $5.00 at our local drug store for $500 back in the 1990s, when that was a lot more money than it is now. But you won't get more than $10 for that Beanie Baby now, though, because like all speculative manias, it came to an abrupt halt for no discernible reason. You still see people listing that same Beanie Baby on eBay (where I sold mine) for $500, but if you look at the completed sales, $9 is the most anyone has gotten this year, and there are a lot of "rare" ones that didn't even sell at a $2.50 price.

That is why some of us elderly, out of touch Boomers worry about whether the market has entered a phase where buying stock has turned into speculative mania. Because history tells us that when that happens, and the mania ends, there can be a long time when stocks just sit around doing not much of anything, and definitely not going up. And we don't even get the dividends now that we used to get in past after crashes to make stocks whose value has sunk worth holding.
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