[ChrisLomont]

>You can forget about seeing any return above inflation.

That's not true. Here's a calculator you can play with that shows S&P 500 returns for any time period you like. Or you can go to FRED data and play around and get the same information.

https://dqydj.com/sp-500-return-calculator/

[throw8383833jj]

i meant, going forward from here.

in the past, we had great returns due to increasing population, plus productivity increases and in large part due to dividends. all three of those are severly decreased going forward for the next 100 years.

[slv77]

Returns are more correlated with working population growth then total population. The US experienced a generational dividend in the 70’s with a higher percentage of the population going to work as smaller families became the norm and women entered the workforce in large numbers.

[ChrisLomont]

If you can predict future market behavior, then you can get rich by taking shorts/longs on your position. There's always some investors willing to take the opposite position.

Good luck.

[slv77]

Some trends are hard to predict short term but easy to predict long term. The day weather forecasts are difficult to predict more then 10 days ahead but climate change forecasts have been very accurate. It is difficult to predict who will be diagnosed with cancer next year but relatively easy to predict cancer rates in the overall population in a given year.

In the long term however we’re all dead so being proven right in 80 years time is meaningless to any investor.

[ChrisLomont]

>Some trends are hard to predict short term but easy to predict long term. The day weather forecasts

Just because weather is a series with such prediction characteristics has no bearing on asset prices having such prediction characteristics. By this reasoning, I could claim since some series are completely predictable, thus stocks are too. Since this level of hand waviness is clearly wrong in the latter case, it is also wrong in the former.

The fact is that asset prices represent value of underlying items, and if those items gain in value, then asset prices likely do too. Since not all asset prices grow or fall in lockstep, then there is always growth in investments possible, if you have enough insight to pick more growing and less shrinking assets.

And the entire set of assets is also likely to grow in value, since people are still working at creating more value.

>being proven right in 80 years time is meaningless to any investor being proven right in 80 years time is meaningless to any investor

True, since they very rarely care about 80 year investments. If they can obtain growth in the near term, then that is pretty much all they need.

So are you now saying there is growth possible, just not in 80 years? Or that you really just don't know?

[slv77]

Over some time period if corporate earnings growth continues to exceed GDP growth then they will eventually consume all of GDP leaving nothing for taxes or labor. This creates a hard upper bound on returns.

GDP growth is tied to working age populations growth and productivity growth which are very long term, predicable trends.

Long term returns on stocks will need to return to GDP (or less) but that could be tomorrow or 100 years from now. While I can be certain that it will happen if it happens and I’m right in 100 years is matters little as I’m dead and it does me no good.

[ChrisLomont]

>then they will eventually consume all of GDP.

This makes zero sense. GDP is not some fixed cap on economic activity. As earnings increase, so does GDP, and there is ample room for all other categories.

Also, taxes and labor are not parts of GDP. I don't think you're using any of these terms correctly, which explains the confusion.

>GDP growth is tied to working age populations growth and productivity growth which are very long term, predicable trends

No, those are factors related GDP growth, but are not sufficient or necessary. GDP can grow without them, it can shrink while those grow, etc.

Inflation alone growths nominal GDP, for example. Other factors include lower interest rates, capital growth, govt spending, devaluation against other currencies, consumer confidence, predictability, and many more.

>While I can be certain

It seems you're basing this certainty on misunderstanding of macroeconomics and ignoring important empirical evidence.

[throw8383833jj]

What I stated about future returns vs past returns is quite well known in the financial community hence it's already priced into all the assets. there's no advantage in knowing something most other financial pros already know.

[imtringued]

It is the same with money printing, when the commercial bank prints money, it also prints debt, or maybe it deprints money?