About What Sir John Said

[DrStool]

So sir John said the market would go up 100 fold in 100 years. That's 4.71% annually. Over the last 100 years the Dow and S&P have had a nominal compound annual rate of return of a hair over 5% before, dividends, commish, fees, taxes. So if Sir John is saying 4.72% for the next hundred years, that makes him bearish, not bullish.

 

When you take out the impact of inflation and the fact that the averages are managed (dropping the ones that go to zero) , the actual real rate of return on stocks has always been and will always be zero, or negative. The real rate of return on stocksrelative to the risk free rate of return is always negative over time frames like 100 years. The last quarter of the twentieth century was an aberation. Although when you consider you coulda bought 30 year T0-bonds in the early 80's for 14-16% yield, the stock market wasn't such a great deal, was it?

[Pigeon Drop]

Sir John says the index will be 100 times its current value in 100 years, PLUS DIVIDENDS PAID OVER THAT TIME. The total return he often talks about is 7%.

[DrStool]

Or Stepan Stool.