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Worldwide Investors Aren't Fully Aware Of The Risks Involved In Their Investments.

Mar. 23, 2021 2:16 PM ET1 Comment
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Plexor's Blog
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Summary

  • After the global financial crisis, world wealth has grown at a CAGR of 5.8%.
  • During the same period, the expected return on US stocks has been equal to 7.9% on average.
  • This means that, during the last 12 years, the risk borne by investors has paired that of an investment of slightly more than 70% in US stocks.
YEAR World Wealth* $ bn US ERP** US T.Bond Rate** Expected Return
2008 209.6 6.4% 2.2% 8.6%
2009 227.0 4.4% 3.8% 8.2%
2010 239.0 5.2% 3.3% 8.5%
2011 253.0 6.0% 1.9% 7.9%
2012 268.7 5.8% 1.8% 7.5%
2013 288.7 5.0% 3.0% 8.0%
2014 289.0 5.8% 2.2% 8.0%
2015 289.9 6.1% 2.3% 8.4%
2016 307.3 5.7% 2.5% 8.1%
2017 351.5 5.1% 2.4% 7.5%
2018† 351.5† 6.0% 2.7% 8.6%
2019† 360.6† 5.2% 1.9% 7.1%
2020† 400.2† 5.6%†¥ 1.1%†¥ 6.7%†¥
CAGR 5.8%
AVERAGE 7.9%
Raw data source: * Research Institute Credit Suisse
Raw data source: ** Damodaran Online
† mid year ¥ computed: monthly average

Analyst's Disclosure: I am/we are long put option on S&P500 index.

Disclaimer: information contained in my articles: is provided for informational purposes only and on the condition that it will not form the basis for any investment decision; is statement of opinion and not statement of fact; is not to be considered as a recommendation to purchase, hold or sell any securities; is subject to change. No responsibility is assumed for any errors or for the consequences of relying or acting on any information provided in my articles. Equity securities, especially small and mid-sized company stocks, are subject to greater risks than bonds.

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