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Comment by bryanlarsen | Hacker News Reader

And that's the S&P 500, based on American stock exchanges, which have probably had the best & most consistent returns over the past 100 years than stock exchanges everywhere else.

The past 100 years witnessed the rise of American domination of global business. Even if American business stays dominant, there's probably less growth from #1 -> #1 then there was during the rise to #1. And that's a big if.

In other words, the future returns of the S&P 500 is probably going to look more like the returns of a basket of international stock markets over the past 100 years than it will look like the returns of the S&P 500 over the past 100 years.

Many people believe that since the S&P 500 has never lost money over any 10 year period that it's never going to do so. It may be highly unlikely, but if you keep rolling those dice eventually you're going to come up snake eyes.

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> "S&P has never lost money over any 10 year period"

Investing a dollar in 1929 meant 20 bad years. Sitting on that dollar for 3 years and investing it in 1932 meant no bad years.

If I look at some expectations and common beliefs that people hold in 2016, I can't help but wonder whether we have one of those 20 bad year periods coming up.

(By the way, part of the success of US assets is definitely related to American companies leading the way in business innovation like IT. But another part is related to the US running trade deficits and the dollar being the reserve currency, meaning large amounts of dollar liquidity flooded back into the US and mostly into its financial system.)

Where "20 bad years" meant that your investment did not keep up with inflation, or barely kept up with inflation, but it still grew in dollar terms.

In terms of bad things happening, that's fairly benign. It could be worse, and probably will be some time. I'm just not going to predict when.

It meant "barely kept up with inflation" in the end. In those few instances: after 2 or 3 decades.

During the intermediate years you would have spent a great many years looking at absolute carnage. Periodically getting trolled by bear market rallies.

"Barely kept up" is therefore very theoretical, because few people have the character to wait it out that long. Many who call themselves long term buy-and-hold, will quietly change their designation after 10 years of watching blood stains drying up.

That's exactly why, after such periods, markets are not just cheaply valued but almost literally "empty" and deserted.

Btw, we haven't had one of those since the 60s/70s.

And only because there was an exceptionally fast run-up in 1929. If you had bought in 1928 instead, for example, you weren't down nearly as much in 1930.

The chart from the article disagrees.

Investing in the mid- to late 20s generally, a period of overvaluation, you would have done well initially. But for people who didn't have perfect timing to cash out (aka most shmuks like me), every buy-and-hold dollar invested in that timespan would remain deeply in the red for a very long period of time.

Due to the severity of the actual 1929 crash, a brief moment of semi-good investment returns (measured over multiple timespans from a few years to decades) occurred in 1933-1935.

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