To: Don Green who wrote (20162 ) 10/19/2017 11:39:37 AM From: Don Green 3 RecommendationsRecommended By
Respond to If You Bought 30 Years Ago Today... Tyler Durden market after the great storm a few days before . The day would eventually become known as Black Monday.The former tops the charts and has returned +2123% (+10.9% pa) since this day and the latter is at the bottom of the pile returning a meager +12% (+0.4% pa). These are local currency returns but even if you were dollar hedged, the Nikkei still only returns a relatively small +41% (+1.1% pa).Greek equities do fall to the bottom of the pile at just +27% (+0.8% pa) given the huge depreciation in the Greek Drachma prior to the Euro .Italian and Spanish Government bonds make the top 5 performers in local currency terms returning +1086% (+8.6% pa) and +1037% (+8.4% pa) respectively over the period. Obviously the Euro convergence story from very high starting yields and in later years ECB bond purchases have provided the impetus here. To repeat these returns over the next 30 years their respective yields would have to migrate towards -21%. Which after the next deflationary crisis, which will unleash even more NIRP and QE is not exactly unthinkable.for US Treasuries to repeat the +602% (+6.7% pa) returns out to 2047 we’d need to see -18% yields at the end of our journey. As Reid explains, " We’ve calculated this on what the returns would be if yields moved to that level tomorrow and were then stable for 30 years. A bit spurious but an illustration of how impossible it will be to get anywhere near these type of returns again."
