I wouldn't dream of investing in equities over a period of just 4 years

Discussion in 'Investments' started by Sarenco, May 27, 2017.

  1. galway_blow_in

    galway_blow_in Frequent Poster

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    im pretty sure thirty year u.s treasuries have beaten the s + p since the year 2000 , not quite twenty years but close enough

    bonds are very expensive today , especially in europe , european equities are no higher than ten years ago, they seem incredibly cheap compared to bunds for example
     
  2. Sarenco

    Sarenco Frequent Poster

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    That is correct and we have recently seen a thirty-year period where 20-year US treasuries beat the S&P500. However, I specifically referred to five-year US treasuries.

    The pricing of any liquid, publicly traded security already reflects the market consensus view.
     
  3. galway_blow_in

    galway_blow_in Frequent Poster

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    my mistake , i overlooked where you specifically referred to five year treasuries
     
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  4. Sarenco

    Sarenco Frequent Poster

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    No problem GBI.

    I actually think you highlighted an excellent point that we all understand intellectually but behaviourly we always forget or ignore - that past performance is no guarantee of future returns.

    Prior to September 2011, it was accurate to say that US stocks had beaten long-term US treasuries over every single 30-year holding period since the US civil war. Can't say that anymore.

    In fact, there isn't a single major developed market that I know of where domestic stocks have beaten domestic long-term government bonds over every single 30-year holding period.

    I'm not suggesting that I have a clue how things are going to pan out over the next 30 years - I don't. I can make guesses. I can formulate probabilities based on historic data and current valuations. But at the end of the day, I really don't have a clue what's going to happen.

    We all want to extrapolate the future from what happened in the past. Unfortunately, markets don't work like that.
     
  5. galway_blow_in

    galway_blow_in Frequent Poster

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    while i realise there are many variables , might it be likely that the huge involvement of central banks this past twenty years has been the biggest thing to determine which way bonds went in comparison to stocks

    i think this is especially the case in the eurozone , i was checking out how the spanish , italian and french stock market performance since the mid nineties on a site yesterday , in the case of france , the market high was way back in 2000 , in the case of spain and italy , its even further back , spains market is still more than 40% below its 2007 high and the ibex 35 is no higher today than in 1998 , so in the case of three pretty major european economies , bonds have absolutely hammered stocks for twenty years , now i dont know if this is down to the creation of a single currency union and a european central bank which many believe especially hurt the economy of italy and favoured others , germanys market has never been higher and bar the 2009 and 2012 heart attacks , has almost done as well as the u.s market since 2000

    the ECB is a relatively new player in the markets so perhaps history doesnt teach as much with draghi and co in such an influential position nowadays ?
     
  6. Noahikman

    Noahikman New Member

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    In everything you must have to take a risk. Just like the popular saying that goes: it is even risky not to take a risk. Business is one of the area you should always be ready to figure out new ways of doing things.