[perl4ever]

People always predict the future from the past, but there are different ways to define a pattern.

Many people think that since the US stock market returned 8-10% for the last ~30 years, then it will for the next 30. This has worried me for a long time for various reasons, but nobody seems interested in my reasons.

However, a new way of looking at things occurred to me recently. In the early 80s, 30 year treasury bonds were ~10%, and with hindsight, stocks were very good buys too. If you bought either one and held until now, you would have made a pretty similar amount. So, if the future resembles the past, maybe what we should expect is that the stock market return for the next 30 years will be the same as the interest on a 30 year treasury today. Nominal, not inflation adjusted, which means ~2.3% is the best case scenario, and civilization collapses if inflation returns. Also, since dividends are about 2% and inflation is not zero, that means after tax returns for non-retirement funds are going to be essentially nothing.