
Stocks post best annual gain in 6 years with the S&P 500 surging more than 28% - tempsy
https://www.cnbc.com/2019/12/31/dow-futures-last-trading-day-of-2019.html
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powowow
A good way to have a great annual return in year y+1 is to have a 21% decline
during December of year y.

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vanniv
2016: +11.96%

2017: +21.83%

2018: -04.38%

2019: +32%

(All numbers are total return, the 2019 source didn't have fractions of a %)

That's not a bad four years' return.

(Yes, December 2018 had a big decline -- but the first 11 months of the year
were pretty good, and we ended only 4.38% off even with the 21% decline in the
last month)

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perl4ever
What is the significance of four years? Personally, I prefer to talk about my
three year return.

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vanniv
I wasn't trying to make a special significance by looking back exactly four
years -- I picked 2016 as a starting point because I felt that it gave enough
context to show that the big drop in December 2018 was a little blip in what
is actually a huge uptrend.

~~~
perl4ever
If that was a little blip, then the uptrend clearly started in 2009.

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nabla9
The value of the index tells very little. You must compare market cap to
something and look at the ratio.

Here is good summary of important ratios December 27, 2019
[https://www.yardeni.com/pub/valcapsales.pdf](https://www.yardeni.com/pub/valcapsales.pdf)
SP500 price to sales, price to earnings, market capitalization, TOBIN’S q.

We don't know what happens, but it's certain that if you buy SP500 at current
price level, you must accept significantly smaller return next 10 years than
previous 10 years.

~~~
yxchng
Isn’t 2009-2019 gain much greater than 1999-2009 gain? What makes you think
that the next 10 years will generate smaller return?

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perl4ever
People always predict the future from the past, but there are different ways
to define a pattern.

Many people think that since the US stock market returned 8-10% for the last
~30 years, then it will for the next 30. This has worried me for a long time
for various reasons, but nobody seems interested in my reasons.

However, a new way of looking at things occurred to me recently. In the early
80s, 30 year treasury bonds were ~10%, and with hindsight, stocks were very
good buys too. If you bought either one and held until now, you would have
made a pretty similar amount. So, if the future resembles the past, maybe what
we should expect is that the stock market return for the next 30 years will be
the same as the interest on a 30 year treasury _today_. Nominal, not inflation
adjusted, which means ~2.3% is the _best_ case scenario, and civilization
collapses if inflation returns. Also, since dividends are about 2% and
inflation is not zero, that means after tax returns for non-retirement funds
are going to be essentially nothing.

