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    Jail the evil pot smokers

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    Soxillinirob
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    Re: Jail the evil pot smokers

    Post by Soxillinirob on Thu Jan 11, 2018 1:10 pm

    When I go back to exactly 100 years ago and then extrapolate that Dow number out to today, I get it to land on our current Dow figure by using approximately 2.9% as the annual growth.  

    I've never heard that our markets grow 10% a year.  I've heard 6-8 as the average, depending on whether you're measuring S&P or some other index.  

    I doubt David Ramsey has any idea what he's talking about if he thinks the S&P returns 12% a year.  Obama had a 12% average S&P return and that's the second best since WW2, unless you count the couple/few years where Ford had an 18% return, which was probably a bounce back from the S&P drop during Nixon.  Aside from Obama's 12%, the only higher has been Clinton, up around 15-16% annually.
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    Deplorable Mark
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    Re: Jail the evil pot smokers

    Post by Deplorable Mark on Thu Jan 11, 2018 10:59 pm

    Well I start with the year 1906 and assumed 100 on day one.


    I assumed a fixed rate of growth, meaning the same for every year


    If that rate is 4.8%, I get to 18,200 at the end of year 2016


    Now I'm not using a formula.  I am using something similiar to an amortization table, but it should be correct.


    End of 1906 is $104.80; end of 1907 is 109.83; end of 1908 is $115.10 etc etc etc


    OK, might be a longer way, but still done in a manner of seconds with a spreadsheet.


    What did you use to get 2.9%?


    BTW, I find it incredibly hard to believe that you never heard the historically average return of the stock market is 10-11%.  I heard that since high school.  However, I must admit, never tried to recalculate it until today


    Last edited by Deplorable Mark on Thu Jan 11, 2018 11:23 pm; edited 1 time in total
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    Deplorable Mark
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    Re: Jail the evil pot smokers

    Post by Deplorable Mark on Thu Jan 11, 2018 11:05 pm

    BTW, using the rough calculation method described above, from when the market peak at 14K in 2007 4Q, to the glorious day Trump was elected,  The Dow's growth was the equivalent of a fixed rate of 2.5 - 2.75%


    OK, Obama wasn't there the first two years, but these long term averages suppose to account for the bulls and bears.  Seems to be you are just picking a time frame that is all bull.  From where I'm sitting, Obama wasn't great for the market.  Instead, his policies turned what is suppose to be a growth vehicle into a gloried CD


    Another way to put it, after sever down turns, you need to do better than 12%
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    Deplorable Mark
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    Re: Jail the evil pot smokers

    Post by Deplorable Mark on Thu Jan 11, 2018 11:20 pm

    BTW, my method, assuming 8000 at the start of 2009, show an 11% fixed rate by time Trump is elected.


    What did you say, 12%?!?!?!


    So we are roughly coming up with the same figure since a 1% difference can easily be a rounding difference
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    Soxillinirob
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    Re: Jail the evil pot smokers

    Post by Soxillinirob on Fri Jan 12, 2018 11:04 am

    Deplorable Mark wrote:
    OK, might be a longer way, but still done in a manner of seconds with a spreadsheet.


    What did you use to get 2.9%?


    BTW, I find it incredibly hard to believe that you never heard the historically average return of the stock market is 10-11%.  I heard that since high school.  However, I must admit, never tried to recalculate it until today

    I just Googled a 100-yr history of the Dow and looked at what the Dow was 100 yrs ago in Jan/1917.  I put that into a spreadsheet and did an annual compounding at various percentages until I got it to land on Dow 25,300 in 100 yrs.  I believe that rate ended up being 2.8 or 2.9%.  Couple of things....first, I don't really accept 2.9% as the Dow growth rate.  I suspect that maybe the data in the history was a bit off, or perhaps it was adjusted for inflation, leaving me to use a faulty initial number.  Also, I didn't test out how it would change doing daily, weekly or monthly compounding, since writing an annual compounding equation was so simple.  Regardless, 10% is not the number.  I have throughout my life heard that the securities markets, especially indices, are the best way to go, and that betting on the index markets will generally return you 6-8% in the long haul, depending on how you measure, and which index you measure.
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    Soxillinirob
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    Re: Jail the evil pot smokers

    Post by Soxillinirob on Fri Jan 12, 2018 11:23 am

    Deplorable Mark wrote:BTW, using the rough calculation method described above, from when the market peak at 14K in 2007 4Q, to the glorious day Trump was elected,  The Dow's growth was the equivalent of a fixed rate of 2.5 - 2.75%


    OK, Obama wasn't there the first two years, but these long term averages suppose to account for the bulls and bears.  Seems to be you are just picking a time frame that is all bull.  From where I'm sitting, Obama wasn't great for the market.  Instead, his policies turned what is suppose to be a growth vehicle into a gloried CD


    Another way to put it, after sever down turns, you need to do better than 12%

    It's very easy for either of us to cherry pick stats and numbers and argue in favor of our guy, or against the other guy.  It's a wasteful exercise in futility.  Nobody particularly holds Obama accountable for what occurred in the financial markets in the first year of his eight years because we were in a steady downslide from day one and most people just figure he came in at the wrong time and had to turn around a horrible downslide.  I don't know whether he "needs to do better" than 12%.  We don't have a history of seeing how we rebound from horrible recessions.  It was considered our worst since 1929, so it's not like we have a lot of prior history to compare it to.  Not to mention, every recession is different.  The housing market collapsed and remained collapsed for how long?  We're still not seeing home sales at historical rates.  Still.  9 yrs since the collapse and we're still not back to the norm.  I recall reading that something like 25-30% of the workforce in the US works in some industry relating to the construction and/or sale of homes.  How do you recover from that when everyone loses 25% of the value of their home in what was seemingly about a 1-2 yr span?  Was Obama supposed to have a magic wand that fixed that and he just refused to use the wand?  Since that's pretty much the first real estate collapse in modern economic history, how do you or I know what a normal recovery should look like?  My home is currently showing on Zillow as worth about 85% of what I paid for it in 2004.  13 yrs later and it's nowhere near what I paid.  Many people can't sell because they can't get enough sales proceeds to pay off the existing loan, along with paying the tax prorations and the realtor commission.  


    I'm not bringing this up to explain that Obama did a great job, or even to defend against the claim that he did a shitty job.  I'm bringing it up to explain that we have no fucking idea because we don't have a benchmark or prior example against which to measure.


    I saw yesterday that Q-poll took a poll and 67% of Americans rated the US economy as either good or excellent.  I guess this is a record high.  Great right?  Yay Trump?!  I don't know.  When they asked those same people, 49% said they think the strong economy is mostly because of Obama and only 40% said it's because of Trump.  Who's right?  Don't know.  Don't care.  Obama wasn't held accountable for the first year of his presidency because of the downslide we were on.  Maybe Trump isn't getting credit because we were on a very steady climb.  


    Personally, I prefer a reasonable, steady climb in the markets and economy.  I hate the artificial run-up we're seeing, unless I'm getting ready to cash out.  When we get an inflated or sudden uptick, we usually end up seeing a sudden drop due to a bubble.  When there's massive increase, like what we're seeing, rich dudes have a bunch of excess money and start investing in whatever will be the next bubble.  Used to be real estate.  All of my rich clients were buying land as fast as they could close and building strip malls and condos and so forth, only to see it all crash.  There is some new bubble forming now.  We're not smart enough to know what it is.  Well, maybe you and your giant IQ know, but I don't know.  


    You're wasting your time, and my time, and everyone else's time when you sit here trying to argue that Trump is more responsible for our economy or that Obama is less responsible.  They both had a hand in it.  You like this sudden run-up.  I like steady run-up.  The tax cuts will give us a one or two year growth bump, and then we stabilize and begin wondering how to create the next artificial bit of growth.  Cutting taxes so that we have a massive deficit and debt hole is not a way to create real growth.  It's fake.  Reagan had to reverse many of his cuts because of the hole he blew in the deficit.  Same will end up happening here.  Short term tax cuts give us a taste of the drug, and then the high wears off.  The bubble we're creating now is probably the high from the tax cuts.  As our deficit gets worse and as interest rates rise, we're in for a tsunami when the shit hits the fan.
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    Soxillinirob
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    Re: Jail the evil pot smokers

    Post by Soxillinirob on Fri Jan 12, 2018 11:36 am

    We are also seeing a very notable run-up in the price of oil as a commodity.  This has on many recent occasions been noted as the impetus for why the market grew so much on various days.  Similarly, when the price of oil dropped significantly in 2015, we saw significant drops in the market to the point where there was talk that there might have been a bubble bursting in the oil markets that could cause some producers to go out of business and default on their bonds and debts.  I don't know how much of the current market growth is due to higher oil prices, but whatever that amount is, I wouldn't call that the kind of growth that will help middle class Americans.  I have quite a few funds that invest in gas/oil, so it's ok for me, but about half of the US has no stocks or funds investments.  Those are very much Trump voters and those voters are now paying more for gas and will continue as such until those oil prices fall, and drag down the indexes in the process.  Stock market index growth is nice for most of us, but it's not really helpful to a large swath of the Trump support.  We're going to need the tax cut just to afford the higher cost of fuel if this keeps up.
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    Deplorable Mark
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    Re: Jail the evil pot smokers

    Post by Deplorable Mark on Fri Jan 12, 2018 12:48 pm

    Soxillinirob wrote:
    Deplorable Mark wrote:
    OK, might be a longer way, but still done in a manner of seconds with a spreadsheet.


    What did you use to get 2.9%?


    BTW, I find it incredibly hard to believe that you never heard the historically average return of the stock market is 10-11%.  I heard that since high school.  However, I must admit, never tried to recalculate it until today

    I just Googled a 100-yr history of the Dow and looked at what the Dow was 100 yrs ago in Jan/1917.  I put that into a spreadsheet and did an annual compounding at various percentages until I got it to land on Dow 25,300 in 100 yrs.  I believe that rate ended up being 2.8 or 2.9%.  Couple of things....first, I don't really accept 2.9% as the Dow growth rate.  I suspect that maybe the data in the history was a bit off, or perhaps it was adjusted for inflation, leaving me to use a faulty initial number.  Also, I didn't test out how it would change doing daily, weekly or monthly compounding, since writing an annual compounding equation was so simple.  Regardless, 10% is not the number.  I have throughout my life heard that the securities markets, especially indices, are the best way to go, and that betting on the index markets will generally return you 6-8% in the long haul, depending on how you measure, and which index you measure.


    SOUNDS LIKE WHAT I DID, EXCEPT I STARTED WITH 100 IN 1906 AND STOP WITH 2016 AT 18200


    DOESN'T EXPLAIN WHY I AM CALCULATING ALMOST DOUBLE


    YOU USING A FORMULA, OR DO YOU HAVE A ROW FOR EACH YEAR LIKE I DID?


    *******************************


    FYI, AT A RECENT SEMINAR, THE TALKER USED 10%.  SO IF IT IS AN URBAN MYTH, ITS RECITED QUITE A BIT


    ANYWAY, THIS SEMINAR IS ABOUT ANNUITIES.  IF YOU AIN'T INTO THEM.  MAY WANT TO CONSIDER


    HERE IS THE ANECDOTAL EVIDENCE.  THE TALKER CLAIMS THAT AT 47, HIM AND HIS WIFE EACH PURCHASED A 100k ANNUITY WITH AN INCOME STREAM RIDER.  THEY BOTH PLAN TO ACTIVATE THE INCOME RIDER AT 70 AND HE CLAIMED EACH WOULD GET $30K.  ADD THAT TO THE $30K EACH PLANS TO GET FROM SOCIAL SECURITY, THEY'D AVERAGE ABOUT $10k A MONTH IN RETIREMENT.


    NOT BAD


    I ALSO UNDERSTAND THAT TODAY'S ANNUITIES OFFER LONG TERM CARE RIDERS.  THAT ALONE MIGHT TIP THE SCALES


    THE GUYS SALES PITCH IS THAT THIS MARKET BOOM IS DUE TO REVERSE AT SOME POINT.  SO MAYBE NOW IS TIME TO GET SOME MONEY OFF THE TABLE AND PUT IN SOMETHING STABLE.


    NOT SAYING THIS IS THE SMARTEST THING AND EVERYBODY SHOULD DO IT.  BUT YOU AND I AND KEVIN ARE AT THE AGE WHERE WE SHOULD BE LOOKING TO GET SOME LONG TERM CARE INSURANCE.  LONG TERM CARE BY ITSELF SUCKS IN MY OPINION BECAUSE ITS USE IT OR LOSE.  BUT TODAY LIFE INSURANCE AND ANNUITIES ARE ADDING LTC RIDERS SO NOW YOU AIN'T PISSING AWAY $100 A MONTH FOR THE NEXT TWO DECADES.


    FOOD FOR THOUGHT FOR YOU AND YOUR FINANCIAL PLANNER.


    ME PERSONALLY, I NEED A BIT MORE GROWTH BEFORE I CAN DO IT.  MIGHT MAKE MORE SENSE AT 60 THAN NOW.  PLUS, I'M NOT LOADED LIKE YOU.  SO THIS MIGHT MAKE SENSE FOR SOMEONE PAYING AMT
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    Soxillinirob
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    Re: Jail the evil pot smokers

    Post by Soxillinirob on Fri Jan 12, 2018 1:24 pm

    I think we pay AMT because we have a lot of deductions and we write off some use of Pam's car for business.  Basically, if we didn't try taking add'l deductions, we'd not have AMT, but if we try to write off Pam's car use, it all gets lost in AMT.  Thusly, there's no point.

    To do the computation on Excel, I just used the Dow amount 100 yrs ago, and then wrote a spreadsheet that's something like B=A+.1*A.  And then the next line is C=B+.1*B.  After that, I copied it down 100 blocks.  I went in and tested it in a few spots to make sure I wasn't using faulty math.  In each case, each year was 10% more than the block before.  Like I said, I only did annual compounding, which can be different than daily or monthly.  Maybe I'll write out a daily compounding equation, which is a tad more complex, but still easy to do.

    I'm not loaded, but the last 7-8 yrs have been very good to us.
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    Deplorable Mark
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    Re: Jail the evil pot smokers

    Post by Deplorable Mark on Fri Jan 12, 2018 2:26 pm

    Soxillinirob wrote:I think we pay AMT because we have a lot of deductions and we write off some use of Pam's car for business.  Basically, if we didn't try taking add'l deductions, we'd not have AMT, but if we try to write off Pam's car use, it all gets lost in AMT.  Thusly, there's no point.

    To do the computation on Excel, I just used the Dow amount 100 yrs ago, and then wrote a spreadsheet that's something like B=A+.1*A.  And then the next line is C=B+.1*B.  After that, I copied it down 100 blocks.  I went in and tested it in a few spots to make sure I wasn't using faulty math.  In each case, each year was 10% more than the block before.  Like I said, I only did annual compounding, which can be different than daily or monthly.  Maybe I'll write out a daily compounding equation, which is a tad more complex, but still easy to do.

    I'm not loaded, but the last 7-8 yrs have been very good to us.


    ODD, I WOULD THINK THAT WOULD WORK

    MINE IS SLIGHTLY DIFFERENT, but using the method you described gives me the same answer of 4.8%, not 2.9%

    PROBLEM SOLVED

    JAN 1 1917, DOW IS 95.  INFLATION ADJUSTED ITS 2000.  BET YOU USED THE INFLATION ADJUSTED NUMBER

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    Re: Jail the evil pot smokers

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