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Comment by liber8 | Hacker News Reader

Because historically, that's what you've been able to get. You can't look at a 5 year timeline (and, obviously, cherry-picking the 5 year time period where stocks dropped by half isn't exactly fair). You should be looking at a 30 or more year timeline.

Even on a 30 year timeline, you can find runs where the average return is less than 8% (just as you can find periods where the return is greater). That doesn't mean it's not a reasonable forecast of what you can expect.

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"Historically" home prices went up in the US until 2006 for well over 30 years.

It is interesting that you bring up cherry picking because that is exactly how mutual fund companies work. They have a lot of funds, the funds that do well stay around and the funds that do not do well are canceled. This fund that I mentioned is only 8 years old. Knowing which mutual funds are going to produce over 30 years is like knowing what stocks are going to produce over 30 years. You can 'cherry pick' examples for 8% or -8%, but it is crazy to assume that the fund you pick is going to get 5% over inflation over 30 years.

...and home prices will continue to go up for another 30 years (and the 30 years after that). Of course there will be recessions (and likely even depressions) during those times. What's your point?

I think you're missing something here. Nobody is talking about picking actively managed mutual funds (which you're right, are a total gamble/ripoff). The Vanguard fund mentioned above is an index fund. It's not at all crazy to assume that by picking the world's biggest index fund, you are going to get 5% over inflation over 30 years.

There is a reasonable line of thinking that the Internet and modern computer modeling and retail investing have had the effect of pricing in the future growth in equities, and so traditional growth will not continue.

Huh?

Pricing in the future growth in equities =!= no more growth...

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