Deep history of stock and bond returns

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Re: Deep history of stock and bond returns

Post by Thesaints »

McQ wrote: Mon Feb 06, 2023 11:24 pm Here is a thought experiment on where to draw the "line of irrelevance" as far as historical stock data is concerned.

"Everything before about 2005 is irrelevant when it comes to projecting future stock returns. When Google pioneered the internet business model, and Apple pioneered the smartphone business model, followed by the social media business model of Meta, the returns available from common stocks fundamentally changed. The pitiful returns available from metal-benders and soap manufacturers were no longer the standard. Just look at the returns recorded on the ARK Innovation ETF."

Of course that's a tongue in cheek, devil's advocate account. If you will, explain why the dividing line between relevant history and irrelevant market history is not 2005, but some other date.
One can look at so many things:
- Until the mid-50's stocks dividend yield was larger than bonds yields. Have you asked yourself why ?
- What about stocks ownership ? Index funds by and large did not exist until late into last century. The general population did not own stocks until the introduction of self-directed retirement plans late in the 80's.

You may enjoy the data essay on measuring historical inflation at
Thank you, but it does not address the fact that people 1900 years ago were much poorer than today. It doesn't make much sense to compare the cost of their consumption to the cost of ours.
Please define the difference between "stale" data and "older, longer, more complete" data. I would also appreciate a discussion of why the first moment of the distribution cannot be estimated under circumstances where the second moment can. I would have thought the two were inextricable.
Using the stock market gains of 100 years ago to formulate a prediction on today's gains does not make sense (again, very different markets). But there is some utility in studying how much those gains varied over time. As an example, today we are not going to have global wars such as WW2, anymore. Yet, one can look at the first half of the XX Century and see what sort of volatility we got from unregulated markets, the Germans marching in Paris, women massively joining the workforce (and teenagers massively leaving it). We can't tell what kind of surprises we will get going forward, but it is useful to see what the reaction was to surprises as unpredictable in the past. How long before markets absorbed shocks ?
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Re: Deep history of stock and bond returns

Post by Artsypenguin »

Someone here shared with Me a paper that had stock returns going back to the 1790s. I think the dow was started in the 1880s, as well, so if you look beyond the s&p, you can find a deeper history of financial returns.
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