With short-term trades giving fast profits and the market going up for years, I think I’ve started expecting too much. When the market is up 20%, it feels like I should be doing that well too. But really, 7-10% a year is normal, and a 2% quarterly gain is fine. I’ve been thinking that 5-10% a quarter is great, and 20-30% a year is expected, but that might be too high. Has anyone else felt like their expectations are getting out of hand?
Yeah, we’ve been spoiled. It’s all about long-term investing. Markets will go up and down, but it’s about staying in for the long haul.
Totally. Recent market and housing booms have made people expect big gains every year. Now if they don’t get 10% or more, they panic and think a recession is coming.
Exactly, we’ve just been lucky. A 7-8% return per year is much more realistic for most investments.
And even 7-8% is solid. That can double your money in about 9-10 years.
Right, if you stick with it consistently, that’s a strong retirement plan.
We’ve been spoiled by recent history. Invest long term. There will always be ups and downs.
True, but what’s your split between US stocks and international ones?
Lately, US stocks have been outperforming, but historically, it cycles between US and international. We often just ride the wave and forget it could swing the other way. People can get caught up in the moment and not ask if it makes sense.
I’m 100% in SPLG for my taxable account. My 401k is in a Fidelity 2050 Target Date Fund.
How do you compare US vs. foreign stocks? I want to look into it myself.
We’re definitely spoiled, but there’s way more free capital now. In the 90s, there were just a few billionaires. Now we’ve got people worth over $100 billion. People forget that a lot of this money is being created through debt. The US has printed over $35 trillion in new currency.
Just dollar-cost average into SPLG and don’t overthink it.
If the S&P 500 tanks, everything else will too, but it’ll come back eventually.
But what if it just goes sideways for your whole investment timeline? That’s the real risk.
Yes, people need to temper their expectations. Since the S&P 500 started, it’s averaged about 7.66% per year. Since 2008, it’s been 14.6%. That’s great, but we can’t expect that forever.
When did stock buybacks become a thing? Wasn’t that in the 80s? Companies are buying back stock instead of investing in themselves.
Jack Welch started that trend. He really pushed for squeezing workers and focused on profits over people.
Rest in shame, Neutron Jack.
True, but when companies buy back stock, the people selling get that money, which then goes back into the economy and drives growth.
Yeah, I’m not saying buybacks are bad, just that they change the game. They can push up stock prices even if the company isn’t growing.
What’s the difference between a buyback and getting a dividend? Don’t they both give value to shareholders?