You believe that your 20-year data means that it is inconceivable to ever have a result worse than break even.
Thought Exercise: $100K invested for 20 years that you're not allowed to touch.
$100K at 2% = $148K real
...but wouldn't ($320K real, invested at 6% US/Global Average) be kinda nice...?
Especially when the worst case for US stocks since 1900 was getting your $100K (real) back, and the the worst case for Global Dev'd since 1970 matched the 2% result of $148K real.
Granted, holding TIPS during a 1929-type stock crash would feel like a blessing, but there is a serious long-term opportunity cost to at least consider....
P.S. As I've been saying, I don't pretend to have the answer, but it certainly doesn't feel like locking up your cash for 20+ years in a 2% TIPS is a no-brainer...
Now if TIPS offered 3 or 4%. the decision would get a little easier ... but alas, invest we must...
Not everybody believes that.
This conversation would be a lot more possible if you could acknowledge the fact that not everyone believes that.
As it is, you keep charging forward as if everyone accepts it. Assuming a common agreement that does not exist is not useful for a discussion.
Imagine that neither the New Deal OR World War II had happened. Would there still be no 20-year period with a negative stock market return? Is the absolute impossibility of a 20 year period with negative stock returns a part of nature, built into the fiber of reality from the moment of the Big Bang?
Edited to add another angle:
In 104 data points (if we start at 1900 and declare that each year starts its own 20 year period) this thing hasn't happened.
In 104 times of driving my car, I have not been in an accident. I still wear a seatbelt.
After 104 times of not experiencing anything hitting my safety glasses while using my new electric weed whacker, I will still be wearing safety glasses.
After 104 times of lighted candles not setting anything on fire while I'm in the room with them, I will still not go to bed with candles burning.
104 is just not enough data points to guarantee impossibility.
Statistics: Posted by BirdFood — Sun Jun 09, 2024 1:17 am — Replies 83 — Views 6058