>At its worst, 1999 to 2009, SP500 total annual return was only -0.2%, per dqdyj.
That might not be adjusting for inflation. According to the calculator on moneychimp, with adjusting for inflation, the cagr for the S&P 500 over that time period was -3.42%. (i.e. $1.00 shrank to 71 cents if invested in S&P 500 Jan 1, 2000 to Dec 31, 2009.
>...and it shows that the government is willing to pull out all the stops if the market is down just -0.2%.
I imagine the potential collapse of the financial markets, was maybe a more important cause of monetary and fiscal policy around that time.
We don’t need to adjust for inflation since we are comparing nominal returns across the board.
What other investment options were there from 1999 to 2009 that had a similar risk profile (implicit backstop by government), but also unbounded upside (unlike fixed income options)?
> I imagine the potential collapse of the financial markets, was maybe a more important cause of monetary and fiscal policy around that time.
Because the businesses are so big ABs interconnected now. If a mom and pop family business goes out of business, that’s a few people who need to scramble, they’re not politically influential enough for a bailout.
If multiple SP500 companies are at risk, then I am going to bet Congress is going to shift into high gear to find a solution.
>We don’t need to adjust for inflation since we are comparing nominal returns across the board.
Well there are things like TIPS, so comparing real returns across the board might be more helpful. Some of the returns from S&P investing will be in the form of dividends, so ideally the amount of taxable gains would also be included to get a better comparison.
I agree that even with the history of long slumps that stocks are still one of the best investments out there.
>If multiple SP500 companies are at risk, then I am going to bet Congress is going to shift into high gear to find a solution.
I think we might be in agreement that bailouts come down to systemic risk and political pull. Silicon Valley bank fails and people got all their money bank even if the accounts were far above the FDIC limits. Other banks fail at about the same time and account holders get only up to the FDIC limit. Maybe there was systemic risk there, but it feels like political pull was at least involved.
When the dot com bubble burst, many large companies failed but there was no concentrated action by Congress or the Fed to bail them out. Hence the lost decade for S&P 500 investors.
That might not be adjusting for inflation. According to the calculator on moneychimp, with adjusting for inflation, the cagr for the S&P 500 over that time period was -3.42%. (i.e. $1.00 shrank to 71 cents if invested in S&P 500 Jan 1, 2000 to Dec 31, 2009.
>...and it shows that the government is willing to pull out all the stops if the market is down just -0.2%.
I imagine the potential collapse of the financial markets, was maybe a more important cause of monetary and fiscal policy around that time.
http://www.moneychimp.com/features/market_cagr.htm