kotika98

Thoughts on Mohamed El-Erian's 'When Markets Collide'

So, actually valuations on US stocks are more reasonable than most of those crazy emerging markets which can go up and down by 30-40% in any year. And the public debt is quite low, relative to the size of the US economy.

Thoughts on Mohamed El-Erian's 'When Markets Collide'

He has well earned his reputation, but clearly wrong on both US equities and bonds. Equities - because most american large companies are global corporations who DO benefit from world growth. And bonds because the US government is not heavily into debt - total debt to GDP is around 35% which is far far lower than every other industrialized country.

Debt_to_Nominal_GDP_Ch...
en.wikipedia.org/wiki/...

Portfolio Planning and the Lost Decade

First, you fail to specify what the defualt setting for the average return and volatility on the S&P500 is. The second thing is, I could calculate what that probability might have been with a calculator, no need for fancy-shmancy Monte-Carlo. You only need MC if you are doing a "dynamical" analysis where your decisions in subsequent periods depend on what happened in the meantime. The other way that MC is useful for financial plannning is if you want to consider the effect of regular contributions due to the dollar-averaging. Once again, for the purposes of this calculation of 10 year returns, you dont need MC (that is if you know what a log-normal distribution is)