[poll] SP500 return expectations poll for next 10 years with dividends

[shalab]

SP500 has done remarkably well from 2009-2015 compounding at an annual clip of 15.8%/year - this poll is to get the boards feeling on the future expected returns.

[Phaceliacapital]

Real or nominal?

[marazul]

I would think something close to 7% total return in nominal terms.

[racemize]

I would think something close to 7% total return in nominal terms.

 

seems about right to me.  And then +/- 5% (probably more on the negative end).

 

Page 6 of this essay has the distribution of 10 year total returns, since we're talking about it:

https://www.dropbox.com/s/uwawteaj86zfz1l/2014-03-25%20Hurdle%20for%20Active%20Investors.pdf?dl=0

 

And to the person saying <5% returns--this would be the first time in the period since 1873...

[Uccmal]

I would think something close to 7% total return in nominal terms.

 

seems about right to me.  And then +/- 5% (probably more on the negative end).

 

Page 6 of this essay has the distribution of 10 year total returns, since we're talking about it:

https://www.dropbox.com/s/uwawteaj86zfz1l/2014-03-25%20Hurdle%20for%20Active%20Investors.pdf?dl=0

 

And to the person saying <5% returns--this would be the first time in the period since 1873...

 

Is that your work Race?  If so, nice job. 

 

Warning: rambling dissertation ahead.

 

If I absolutlely had to produce a number I would lean closer to 5%.  I think were in for a couple of decades of tech/productivity driven deflation.  The last such event was the 1870s to the 1890s. 

 

My tactic, subject to change, of course, is to invest for dividends.  Companies that can keep their dividend above the compounded cost of borrowing, without borrowing to sustain it, are the place to be in a slow growth environment. 

 

Amazon et al, are driving costs for goods down relentlessly.  Profit margins get squeezed for everyone who produces goods, including Amzn.  I am in the market for a smartphone and its not going to be an Apple or Samsung.  My Ipad is 1.5 years old and I wont ever be spending $700 on another tablet.  Predicting the next high flyer is beyond impossible. 

 

In the last 15 years we have seen entire industries get buggy whipped: printing, pulp and paper, coal is on its way, photography, digital cameras, recording, Videos, newspapers, books.  Others have been upended completely but are still thriving, such as telecom. My stock portfolio is leaning toward the industries that seem to survive every upset: energy (oil for now, and renewables); communications infrastructure, transport, and banking.  The top operators such as Google, Apple, Berk, amd BAM have all gotten into these spaces. 

 

Has anyone noticed that your friendly neighbourhood auto mechanic has been replaced by parts swappers.  They plug the Pcode reader in, and it tells them what to replace.  They have lost the ability to think, and diagnose problems without their devices.  People and companies that can actually think will be successful.  I dont know how the hell you identify these apriori. 

 

When the internet first started in Canada, there were hundreds of little providers.  Slowly but surely the incumbent phone and cable companies bought them up or ran them out of business.  I think you will see the same thing happen in energy now: ie: exxon as an energy company rather than an oil company.  Buffett as usual has also seen this.  Parts of Berkshire are becoming a great big cap and trade operation.  They can trade carbon credits earned at the renewables division to other divisions to reduce costs.  As per Sharper D's comments, I wonder if Buffett makes an all in bid for Suncor in order to create a carbon sink - make money by not selling "dirty" oil.  Now I am really off the reservation.

 

The one thing I find worrying about using S&P data is that it misses the majority of the worlds markets, which have generally not performed as well as the S&P.  The growth of the S&P will reflect worldwide growth rather than US growth going forward.

[kfh227]

I'll be frank.  We are due for a recession.  Sit in cash/equivalents and when the next recession hits, pounce.  You'll get better results this way.  Of course, till the next recession hits, you need to be VERY selective but talking SP500 specifically, you'll make more via an index in the 500 if you wait.

[racemize]

I would think something close to 7% total return in nominal terms.

 

seems about right to me.  And then +/- 5% (probably more on the negative end).

 

Page 6 of this essay has the distribution of 10 year total returns, since we're talking about it:

https://www.dropbox.com/s/uwawteaj86zfz1l/2014-03-25%20Hurdle%20for%20Active%20Investors.pdf?dl=0

 

And to the person saying <5% returns--this would be the first time in the period since 1873...

 

Is that your work Race?  If so, nice job. 

 

 

Yes and thank you!

 

P.S. agreed on your comments on S&P data versus world data.