new | show | ask | jobs Github

keoneflick 2 hours ago

An investment in the S&P 500 at the heights of 2000 would not materially exceed its basis until 2013!

An Nasdaq would not materially exceed until 2016.

Yes, this ignores dividends, but that really only helps manage inflation.

You would have done much better being out of the stock market until the 2009 crash.

▲

Grombobulous 6 minutes ago | parent | next [-]

Well, you aren't necessarily better sitting out entirely.

When the stock market slumps like that, continual investment lowers your average cost basis.

e.g.:

Year 1: Buy 1 stock at $100

Year 2: Buy 1 stock at $50 (post-crash)

Year 3: Buy 1 stock at $60

Year 4: Buy 1 stock at $70

Year 5: Buy 1 stock at $80

If we just look at "Year 1 = $100, Year 5 = $80" then it looks like we lost $20/share.

However, our average cost basis is $72, so we actually made $8 per share.

That’s not really a great return but it’s not horrible considering the circumstances.

▲

rsanek 2 hours ago | parent | prev | next [-]

Excluding dividends is a pretty big asterisk, including them you're back to even within 6.5 years.

	▲	keoneflick an hour ago \| parent [-]
		The parent described "exponential returns", which I was reacting to. For what it's worth, the S&P dividend yield is typically 1-2%, and below inflation for the majority of relevant years. So you are not ahead in real dollars until roughly the dates I mentioned.

▲

orangepanda 2 hours ago | parent | prev | next [-]

Dividends are part of the total returns and cant just be ignored. Taking them into account, the break-even point is non-insignificantly earlier.

It’s the total returns that matter, not just stock price.

▲

zackmorris an hour ago | parent | prev | next [-]

I was there, and this is why I consider the 2000s a lost decade.

Honestly we only just started to get back into the swing of things from 2012-2016 when Obama's reelection provided enough market confidence for electric cars to reach MVP status in 2013 and solar panels to begin scaling until Trump slapped a 30% tariff on them in 2018. Progress in sustainability is my litmus test for the economic viability of getting real work done in the economy, sort of like grading a steakhouse on how good its least-ordered mushroom appetizer tastes. We could also choose healthcare, education or any other field whose success is determined by the social good it provides.

If it weren't for the arrival of AI, I'd call this a wasted quarter century.

▲

an hour ago | parent | prev | next [-]

[deleted]

▲

ashdksnndck 2 hours ago | parent | prev [-]

So if you knew in advance about the timing of both the tech bubble and the real estate bubble, you could have made a lot of money trading on that?