Author Topic: 20 year bear market?  (Read 3260 times)

scorpioncapital

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20 year bear market?
« on: March 18, 2009, 10:01:04 PM »
In 2000, the S&P was 1500. The current decline has been 50%. That means we need a 100% gain to get back to 1500. If the market now returns 2x the average, say 10% per year, it will take 10 years to get back to 1500 - 2020 is almost exactly 20 years.


Parsad

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Re: 20 year bear market?
« Reply #1 on: March 18, 2009, 10:56:32 PM »
If the market now returns 2x the average, say 10% per year, it will take 10 years to get back to 1500 - 2020 is almost exactly 20 years.

Dude, without a calculator...the rule of 72.  72 divided by 10% equals 7.2 years.  Thus 2016 is when you should get back to 1500.  But you are pretty close.  The S&P500 hit a 12-year low last month, so add 7.2 years and you get pretty close to 20 years.  Remember though that the market does not move in a linear fashion.   Cheers!
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arbitragr

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Re: 20 year bear market?
« Reply #2 on: March 19, 2009, 02:09:42 AM »
WEB was pretty much spot on re; returns for stocks in that Fortune article after the tech bubble ... 6-7 years after the fact.
"worry top down, invest bottom up ..."

scorpioncapital

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Re: 20 year bear market?
« Reply #3 on: March 19, 2009, 08:24:10 AM »
Good point I guess I forgot the power of compounding. I guess dividends might accelerate this timeline somewhat as might above average inflation.

uncommonprofits

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Re: 20 year bear market?
« Reply #4 on: March 19, 2009, 01:37:20 PM »
Good point I guess I forgot the power of compounding. I guess dividends might accelerate this timeline somewhat as might above average inflation.

Dividends are not over and above -- they are factored into the index.

scorpioncapital

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Re: 20 year bear market?
« Reply #5 on: March 19, 2009, 08:16:10 PM »
I just can't get it right :)

ericd1

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Re: 20 year bear market?
« Reply #6 on: March 20, 2009, 10:53:15 AM »
If you invest in a 2x leveraged index ETF you could double your returns and get their in half the time.

Or, what about a 3x?   1/3 the time?    Possible?  Prudent? 

Let me pose a question - If you believe equities are poised to return 10%+ annually over the next 7-10 years) would you consider holding a 2x leveraged index for the long term? 


benhacker

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Re: 20 year bear market?
« Reply #7 on: March 20, 2009, 02:09:03 PM »
I think anyone holding a leveraged etf at all can't do math.

If you think you get 20% over 1 year if the market does 10% with a leveraged 2x ETF, you are sadly mistaken.

Take a stroll through the past performance of leveraged etfs over various time frames... also peruse their taxable distributions and their efficiency.

These things are totally toxic, but people love to play short term moves, and they do work for that.

Ben
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Beaverton, Oregon - USA

Uccmal

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Re: 20 year bear market?
« Reply #8 on: March 20, 2009, 02:18:47 PM »
Too true, Buy twice as much of the ETF or leverage it yourself through calls. 

Quote
If you think you get 20% over 1 year if the market does 10% with a leveraged 2x ETF, you are sadly mistaken.

Take a stroll through the past performance of leveraged etfs over various time frames... also peruse their taxable distributions and their efficiency.
GARP tending toward value

arbitragr

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Re: 20 year bear market?
« Reply #9 on: March 20, 2009, 02:37:23 PM »
"worry top down, invest bottom up ..."