Why high stock prices are bad for future retirees:
The future will be like the past. Stocks have done well in the past. So they will do well in the future.
Over the past century stocks have returned 7.2% a year, net of inflation. That’s the gain in purchasing power enjoyed by a hypothetical investor starting in 1919, reinvesting all dividends and incurring no taxes or money management costs.One or the other of these numbers might be used in the scientific sounding Monte Carlo simulations from your financial planner. Projecting the past into the future explains the starry-eyed aspirations of the Financial Independence, Retire Early crowd.
In fact, of course, corporate America disburses cash all four ways: dividends, acquisitions, share buybacks and expansion. One factor is that companies can’t maintain their earning power while standing pat. Some of that $7 has to be reinvested to offset the erosion caused by economic and technologic change. This reinvestment is over and above whatever outlays are financed by depreciation allowances already built into the $7 net income calculation.
Now let’s apply this analysis to today’s market. We find that neither 7.2% nor 6.1% is a realistic expectation for stock market returns.
France Dernières Nouvelles, France Actualités
Similar News:Vous pouvez également lire des articles d'actualité similaires à celui-ci que nous avons collectés auprès d'autres sources d'information.
'Breaking Bad' movie looks to focus on hunt for Jesse PinkmanAfter confirming a rumored 'Breaking Bad' film was in the works, Netflix debuted the trailer for 'El Camino: A Breaking Bad Movie' on Saturday.
Lire la suite »
See J Balvin, Bad Bunny Perform Trippy ‘Qué Pretendes’ at 2019 VMAsWatch J Balvin and Bad Bunny channel the pop absurdism of David Byrne with the wacky, technicolor aesthetic of old Looney Tunes cartoons for their VMAs debut
Lire la suite »
J Balvin & Bad Bunny Give the VMAs the Cartoon Treatment With 'Que Pretendes' PerformanceJ Balvin and Bad Bunny keep making history singing in Spanish during the MTV VMAs 2019.
Lire la suite »
J Balvin & Bad Bunny Electrify the MTV VMA Stage With 'Que Pretendes'The reggaetoneros performed their song from their joint album, 'Oasis,' on Monday night.
Lire la suite »
Rep. Cohen: Trump 'transparent' in a bad wayCongressman Steve Cohen (D-TN) joins Morgan Radford to discuss ongoing negotiations to compel former White House counsel Donald McGahn to testify, saying that President Trump's obstruction of justice is ongoing and that he does it 'out in the open.' Cohen also debuts his latest fashion accessory, a 'Make Russia Great Again' hat.
Lire la suite »