In my previous article, I pointed out the world is not ready for the upcoming global recession based on a broad spectrum of economic factors.
In this post, I've summarised why the value of the US Bellwether S&P500 needs to drop by 50% to maintain the historical average 10% return for a balanced mix portfolio for the next ten years.
According to historical records, the average annual return of S&P500 since its inception in 1926 through 2018 (in a pure hypothetical 100% allocation) is approximately 8-10%.
However, in any given year, the same index fluctuated, and in some years it went down by 10-50%, and in 2007 it took five years to recover.
In hindsight, it is easy to expect a high return assuming entry at the lowest value and exit at the highest point. However, an extended return is not just a measurement of trough-to-peak advances of the market but the consideration of peak to through value as well.
For example, if you invest in the market today with the current margin adjusted leveraged P/E of over 40%, your return for a balanced portfolio for the next ten years would be less than 1%.
In this post, I've summarised why the value of the US Bellwether S&P500 needs to drop by 50% to maintain the historical average 10% return for a balanced mix portfolio for the next ten years.
According to historical records, the average annual return of S&P500 since its inception in 1926 through 2018 (in a pure hypothetical 100% allocation) is approximately 8-10%.
However, in any given year, the same index fluctuated, and in some years it went down by 10-50%, and in 2007 it took five years to recover.
In hindsight, it is easy to expect a high return assuming entry at the lowest value and exit at the highest point. However, an extended return is not just a measurement of trough-to-peak advances of the market but the consideration of peak to through value as well.
For example, if you invest in the market today with the current margin adjusted leveraged P/E of over 40%, your return for a balanced portfolio for the next ten years would be less than 1%.
