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Comment by jfengel | Hacker News Reader

It is true that market timing is always dubious. But that also means that there's never a wrong time to invest in the market as a whole. Individual stocks when crashing are dangerous if you can't outsmart the reason they are crashing, but in aggregate stocks will go up by a modest amount on decade long scales.

I felt weird about that advice a few months ago, when the market seemed genuinely overpriced as a whole and due for a correction. But a decade from now the difference between investing six months ago, now, or six months from now will be just part of the noise. The right time is visible in retrospect, but since you can't do that you can at least pat yourself on the back for getting a better deal today than you would have gotten a few months ago.

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in aggregate stocks will go up by a modest amount on decade long scales.

There is some truth here, but it isn't entirely true. People who get in the market at their peaks, often see multi decade long negative returns (adjusted for inflation). If you bought the market in 1928, you were negative until the mid-50s. If you bought in the late 60's you were negative until the mid-90s. If you bought in the late 90's, you were negative until the mid 20-teens.

That doesn't represent the situation most investors are in: large lumps of cash don't come people's way very often, most of us are paid on a monthly basis.

True, and regular investing does pay off. Others have pointed that out.

However, these evergreen articles (i.e. just dust off the one from the last market crash) are suggesting that you should particularly invest in tech right now, not that you should regularly invest in it. Possibly even with money that was going to be on the sidelines otherwise.

Here's a relevant example that timing isn't that important in the long term: https://www.cnbc.com/2015/08/27/the-inspiring-story-of-the-w...

Timing is quite important in the longterm. This article is saying that you can still make a profit despite bad timing (assuming the stock market does well), not that timing is not important.

It also only analyzes a single time period (1970s - 2015), which happens to be quite a good one for stocks, and then makes an implication about markets in general which is quite speculative.

Yes, but the point is: even with the worst possible timing you still get ahead of inflation ($1.1M from $184k invested). With regular investments you could double the profits. Also, 1970-2015 period includes three big crises, with crashes of around 50% (1972, 2000, 2007), and a bit milder crash of 1987 (34%), calling it "quite a good one for stocks" is kind of a stretch.

The U.K. stock market peaked [inflation adjusted] in 1899 and never hit that mark in real terms again:

https://fredblog.stlouisfed.org/2019/12/how-has-the-u-k-stoc...

Notably ~1917 is when global power shifted from the U.K. to the U.S., cemented in 1945.

(not sure if they included dividends - would probably change the calculations, but for sure you see that 1815-1900 was a ~85 year general bull market in U.K. stocks, followed by ~75 years of real-term declines from 1900-1975).

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Also, the U.K. stock market went nowhere from 1874 to 1952 in pound terms, a whopping ~70 years!

Investers in the 1914 German stock exchange were negative for 100 years.

But was there a better alternative? Sometimes the current is so strong that no lifeboat can stay above water.

They could have invested outside of Germany, but maybe that wasn't legal.

Of course, lots of money found its way to Switzerland anyway over the decades, and those bankers were very close-mouthed.

Someone investing over three decades doesn’t invest on a single day or year at the beginning of that time period.

Most people put money in stocks via ETFs inside 401k, IRA, and brokerage accounts periodically (usually monthly) over decades.

The Portfolio Charts[0] site has heat maps showing how long it takes for a given portfolio to have a positive ROI. The charts only go as far back as 1970, but they're interesting nonetheless.

Indeed, for the Total Stock Market portfolio[1], if you had invested a lump sum in 2000 you would have needed to wait until 2014 to see a positive ROI. A more conservative 60% stock / 40% bonds portfolio[2] would have recovered (though not by much) by 2010.

That said, as another commented pointed out, this is not very reflective of the reality of most retail investors: most people will invest over long periods of time rather than all at once.

[0] https://portfoliocharts.com/

[1] https://portfoliocharts.com/portfolio/total-stock-market/

[2] https://portfoliocharts.com/portfolio/classic-60-40/

> but in aggregate stocks will go up by a modest amount on decade long scales.

They have, but why must they? We’re heading into a decades long period of hyper-aging in much of the world and the commensurate rise in capital costs, an energy crisis in Europe that is far from over, the decline of East Asian mass manufacturing and associated inflation, a labor shortage in the US right when it has to massively increase domestic production, and a shortage of all raw materials where Russia or Ukraine were major suppliers. I suppose in 20 years when the markets have adjusted suppliers, the damage is priced in already, and capital supplies are recovering in the US thanks to the Millennials, it might start looking up here, but from a similar or higher base than now? That’s not obvious to me.

It isn't absolutely certain, but it is true that technology has a way of moving forward at a remarkably consistent rate. That is the ultimate driver of real growth.

That does seem like it should flatten eventually, and maybe that's now. But I can't anticipate a radical change and can only guess that tomorrow will be more or less like yesterday. That is potentially fraught but the best I can do.

> technology has a way of moving forward at a remarkably consistent rate

For centuries the general pattern has been improving technology, followed by better nutrition and healthcare, followed by greater populations and productivity, followed by greater capital to invest in technology and on and on. Over more recent decades this was put into hyperdrive with the boomer population bubble in the west spurring massive consumption and then massive capital investment, and as developing nations tapped into global trade this lead to a massive rise in the standards of living and cheap mass manufacturing. However the meteoric industrialization of developing nations has lead to record drops in fertility and so the likes of China are already reaching hyper-aging. We may have already hit peak global population or will soon as hyper-aged communities start to predominate around the globe and increased death rates follow. Better technology can't induce increased consumption in the aged right when we have fewer younger people to develop and less capital to fund that development.

TLDR: that seems like a recipe for less technological development, lower GDP, and therefore possibly a decades long depression in stock prices.

As long as technology and human society progresses, then yes, GDP is guaranteed to rise, and stocks are guaranteed to rise a bit more than GDP, because they represent the best, most innovative part of the economy (mom and pop's grocery stores are not traded on Wall Street, technological startups are)

> As long as technology and human society progresses, then yes, GDP is guaranteed to rise

My whole point is that it looks like human society globally is going to decline rapidly and, in some regions, catastrophically. Old populations don't consume as much, once they get old enough they don't produce as much, how would GDP grow then? Well that is the looming reality for Europe, China, Russia, Japan, Canada etc. The USA is relatively ok there but it's just a matter of time before we get there too unless birthrates veer sharply towards at least replacement level.

> but in aggregate stocks will go up by a modest amount on decade long scales

They have in the past. There is no guarantee that they will continue to, although I do personally suspect they will.

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