mg, "That makes your assumption of 12% "regular growth" somewhat suspicious."
Yep. Tench and Kap already pointed my mistake.
"What numbers would you get if you assumed THAT to be the "real" trendline? Not saying I necessarily believe it, but I find your assumptions somewhat arbitrary."
I must admit I am fully ignorant in financial/economical
sciences. But while looking at the historical SP500 data,
especially in log scale, few things captured my attention.
In recent rallies, 84-87 and 95-99, the compounded rate
of SP500 return was interestingly similar: 2x in 3 years,
or 26+% yearly. During relatively quiet periods, 89-94,
and maybe 78-83, the slope corresponds to 8%/year.
Based on the most recent trend of 89-94, the SP500 must
be about 900 today. I think the most recent trend is
more likely to define the bottom, since I believe that
the market system is a system with memory (in every meaning)
- old matured investments I think are less liquid than
more recent (and especially bubble-acquired). But what
strikes me most is that for all those periods of several years long
the SP500 grows was exponential, meaning that the stock
market is always in a free (rise or) fall, until it hits
something like energy crisis, AG, or whatever.
I am certain that there are experts who know how to model
non-stationary systems with memory using
integro-differential methods, who could explain all this.
- Ali |
