The lowest (2000-2020) was 6%. Most of the others were in the 8%-9% range, definitely lower, not significantly lower than the 10% average (although it does add up over 20 years). Returns were WAY higher than "expected". Calculations for "expected" returns done in the past using valuations were way off.I am concerned with 20 year returns or longer.
So US had a “good” outcome at 6-7%, significantly lower than 10-11% US average.
There is no law, but US valuations have been "high" since 1990. That long without reverting to the mean DOES NOT conform to history.ExUS also was highly valued, had MUCH lower than 6-7% returns, so not a great outcome either.
Any way you slice it, elevated valuations have meaningfully reduced returns. And valuations have not stayed high anywhere outside the US. There’s no law that says US is at some permanently high valuation level. History tends to show otherwise
Something may have changed. Accounting rules, types of industries, government intervention, who knows?
But the data is off.. Before 1990, valuations spent 55% above average, and 45% below average. Since 1990, we've been 99% of the time above-average.
History doesn't offer a very good guide here. This hasn't happened before. This is new.
Again, note I'm NOT saying valuations will remain high, and returns will be good going forward. I have no idea. But there apparently is no law that says valuations have to mean-revert every 15-20 years either.
Statistics: Posted by HomerJ — Wed Jul 17, 2024 11:17 am — Replies 6563 — Views 1632564