can you really bet on stock going up 8 to 10 % per year

[Sky123987]

The market has done 8 to 10 % since the beginning, however it hasn't been around that long at all, can you really bet that in our lifetime it'll do the 8 to 10 % like in the past???

 

[loik]

Quote from Sky123987:

The market has done 8 to 10 % since the beginning, however it hasn't been around that long at all, can you really bet that in our lifetime it'll do the 8 to 10 % like in the past???

before/after adjusting for inflation?

 

[mokwit]

Go to your library and get a 50 year old stock page and see how many names you recognise......................

 

[Sky123987]

Quote from loik:

before/after adjusting for inflation?

I think the 8 to 10 percent is before adjusting for inflation

 

[Sky123987]

Quote from mokwit:

Go to your library and get a 50 year old stock page and see how many names you recognise......................

I'm sure you won't recognize many, however what does that say?? that companies rise and falls all the time. During that time the markets have done quite well.

 

[bat1]

buy IBM

 

[loik]

Quote from Sky123987:

I'm sure you won't recognize many, however what does that say?? that companies rise and falls all the time. During that time the markets have done quite well.

M & A

 

[El OchoCinco]

Quote from Sky123987:

I'm sure you won't recognize many, however what does that say?? that companies rise and falls all the time. During that time the markets have done quite well.

What it says is that indexes are a good example of survivorship bias. The losers are kicked out and new winners are added in and they are constantly updated year in and year out. So to say the marekts go up a certain amount annualy is kind of a slanted stat since the index is a private for-profit company creation that is constantly updated to show positive results. Over time all solid blue chip companies grow but you cannot confirm that an average is 8 - 10% a year. The stat is also biased by what holding period you rely on.

You cannot bet on anything in the market really, just do your due diligence and try to make money for the long-term.

 

[Mathemagician]

This is not survivorship bias unless the indices' histories are revised to reflect the changes in the components.

M

 

[El OchoCinco]

Quote from Mathemagician:

This is not survivorship bias unless the indices' histories are revised to reflect the changes in the components.

M

Perhaps incorrect use of the term. My point is that they simple cut the losers out and keep the winners so the "market" always appears to be going up over time.