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A great chart of the dispersion of S&P 500 returns over nearly the past 200 years via...

A great chart of the dispersion of S&P 500 returns over nearly the past 200 years via Heritage Capital. At first glance, it looks like how they might draw up a bell curve in Stat 101, but a closer look reveals the powerful upward drift of returns from human endeavor.
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Comments (5)
  • wapiti
    , contributor
    Comments (711) | Send Message
    say what??
    27 Aug 2012, 02:31 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9973) | Send Message
    OK, it does show some upside drift. Is that mainly the result of the Fed's inflation bias and particularly over the last 50 years?
    27 Aug 2012, 02:43 PM Reply Like
  • Stoploss
    , contributor
    Comments (1727) | Send Message
    Hahahaha! There it is, 2000-2010 Greenspawn..


    Then the straight up Bernankespawn to finish out.


    All non organic, all FED............. All the time!
    27 Aug 2012, 02:56 PM Reply Like
  • GaltMachine
    , contributor
    Comments (1490) | Send Message
    Perhaps the relative volatility of the current modern period versus the past is also a direct reflection of the boom and bust of a credit bubble. Very similar to the boom and bust of the 1920's - very similar pre and post bubble bursting corresponding with extreme return spreads from year to year and the prior 10 year period.


    Look at 1935, 1933 versus 1930, 1931, 1937 that's pretty wild.


    Funny 1929, despite the "crash", wasn't that bad on a relative basis and the 5 years previous were just phenomenal.
    27 Aug 2012, 03:02 PM Reply Like
  • john beattie
    , contributor
    Comments (18) | Send Message
    for the few that still understand and properly apply the Kondratief long wave economic cycle, the returns from 1922 to 1929 compare to the returns of 1981 to 2008, both are compiled during the disinflationary plateau phase. Prior to modern day this phase in previous cycles was as short as 7 yrs. and as long as 13 yrs. Falling inflation, falling interest rates, low wage increases and a government return to financial conservatism, all resulted in an extended period of buoyant capital markets, eg high annual returns for equities and bonds. I had clients in 1981 who locked in 13% compound annual returns for 20 yrs. buying zero coupon government of Canada bonds all motivated by an understanding of the Kondratief economic wave. Followers forsake or misinterpreted the cycle in modern day because never before had world central banks interfered with the economic cycles as Mr. Greenspan and company did worldwide. The result was a very extended disinflationary plateau that lasted for 27 years versus previous long of 13.
    However, the structural causes remained the same, too much build up in debt and over expansion of production supply in goods and services. Now we have entered the depression, debt liquidation, deflation phase, and once again central banks are doing all in their power to avoid this relentless and necessary correction in the long economic wave. One can see that despite the central banks efforts that the debt structure is too immense and that ultimately monetary expansion will result in pushing on a string and the debt liquidation and deflationary phase will play out as Kondratief would have predicted. Make sure you have gold equal to a minimum of 20% of financial assets as it will play the role of money and gain value relative to deflating real assets, and it wouldn't hurt to learn how to trade capital markets because there is likely to be some major extended swings in the markets as the central banks and politicians try to prevent the inevitable. Good luck to all.
    27 Aug 2012, 03:38 PM Reply Like
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