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dang 4 days ago | parent | next [-]

Please edit out swipes and name-calling from your posts to HN, as the site guidelines request: https://news.ycombinator.com/newsguidelines.html.

Edit: You did it elsewhere in this thread too - https://news.ycombinator.com/item?id=44840174. That's not cool, regardless of how wrong someone is or you feel they are.

Fortunately, your recent comment history looks fairly free of this kind of thing (that's good), so it should be easy to fix.

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the_real_cher 4 days ago | parent | prev | next [-]

The math in the statement is correct in the short term. If the risk-free rate is around 3% and the equity risk premium is about 4%, the expected return on stocks would be roughly 7% a year, which would double values in about 10–11 years using the Rule of 72. That doubling could occur for a time even without productivity growth, as companies can boost earnings through pricing power, cost-cutting, or financial engineering.

Over the long run, though, sustained returns depend on fundamentals like productivity growth, population growth, and inflation. Without productivity gains, corporate profits would eventually stagnate, making it difficult to maintain a 7% annual return. Risk premiums, interest rates, and valuations also change over time, so fixed assumptions rarely hold for decades. In short, the doubling math works, but it oversimplifies the economic reality that long-term stock growth ultimately relies on productivity.

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bluecalm 4 days ago | parent [-]

My point was that is that even without any economic growth stock indexes grow quickly because they are cumulative (that is include profits of companies by either dividend paid or stock buybacks). Some indexes are not fully cumulative but they are still close enough because companies often prefer buybacks to dividends these days (for good reasons).

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the_real_cher 3 days ago | parent [-]

Stonks always go up.

	▲	bluecalm 3 days ago \| parent [-]
		They do in expectations of course. It's like saying "overall businesses make money and money accumulates over the years". You are rewarded for not spending your money right now. Taking some risks (risk premium over risk free rate) and not being an idiot (keeping your money in a bank or mattress or whatever). Market puts price on that reward. Unless you believe market is completely wrong about everything then yes - stonks will go up. Sometimes I feel the reason for many political views presented on HN is misunderstanding of very basic of finance and economy. The whole discussion here that started with absolutely nonsense comparison (stonks go up faster than wages) is one example of that.

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Epa095 4 days ago | parent | prev [-]

[flagged]

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dang 4 days ago | parent | next [-]

Please edit out swipes and name-calling from your posts to HN, as the site guidelines request: https://news.ycombinator.com/newsguidelines.html. I realize you didn't start it, but we need commenters here to follow the rules regardless of what others are doing. (Otherwise we end up in a downward spiral: https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...)

Edit: You did it elsewhere in this thread too - https://news.ycombinator.com/item?id=44842213. That's not cool, regardless of how wrong someone is or you feel they are.

Fortunately, your recent comment history looks mostly free of this kind of thing (that's good), so it should be easy to fix.

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Epa095 4 days ago | parent [-]

It's hard when people call me confused :-/ But I would edit it away if I could! But it seems like I can't edit this post anymore, should I be able to?

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dang 3 days ago | parent | next [-]

The edit window has passed. But don't worry! all that matters is to correct things going forward.

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bluecalm 4 days ago | parent | prev [-]

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	▲	Epa095 3 days ago \| parent \| next [-]
		So, talk me through where I am wrong. I will use the example in my sibling post you did not reply to. If you put 10 million into the S&P 500 in 2002 you would get a dividend of roughly 132k (1.32%). That's your share, as a owner, of the wealth produced that year across all the companies you own tiny parts of. Keep the money there, do absolutely nothing, and in 2025 it has grown to 70 million. Your yearly payout is roughly 925k, 7 times what it was 20 years ago. You agree with this? And then we compare that to wages, and see that they have grown significantly less. You agree to this as well? For sake of argument, let's say they doubled. From this I conclude: - Income from capital grows exponentially faster than income from salaries. - The person who invested 10 million in 2002 gets a larger fraction of what the economy produces compared to a salaried person today than 20 years ago. - That difference will increase if the stock market continues as it has done in the past. Please help me understand which conclusion you disagree with, and why.
	▲	dang 3 days ago \| parent \| prev [-]
		This was not a good moment to start the argument all over again. Please don't harangue other users, regardless of how badly they're missing a point or you feel they are.

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bluecalm 4 days ago | parent | prev [-]

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	▲	Epa095 4 days ago \| parent [-]
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