What can make money?

[NTL]

According to him, it is S&P 500. No backing up by historical statistics though. Can someone (with higher IQ) dig up S&P 500 historical statistics of return accordingly, to prove his option true or not?
i think if it's true, then why am i investing in SGX?
Thanks.

Temperament, why don't you see yourself at this wikipedia link or this Yahoo Finance link

From wikipedia, CAGR from 1970 to 2012 is 9.94%
From Yahoo Finance, from 1950 to 2013 S&P 500 returns 9051.19%, so CAGR is 7.43%

you can actually buy S&P 500 ETF directly from your US stock broker

Can it be repeated? I think as a country develops, the growth will generally slow down...

Furthermore, the past 30yrs (especially from '80 to '00) are the best years for US market. If take another segment of history, say from '55 to '85, I don't think it will be that fantastic...

[Temperament]

Here you go... Not sure about its authenticity...


www.dqydj.net/sp-500-return-calculator

Thank you everyone!
i did a 1983 to 2013 using the above.
Wow! Awsome! If it can be authenticated by someone.

The only thing is can S&P 500 repeats the same history? Or America will decline like once "Great British Empire"? So is it not the same with Singapore & SGX, relatively speaking?
Another words is it a viable option to invest as suggested by the lecturer without "a care in the world" for 30 years?
The lecturer is not in favour to do the same with STI ETF.
To me actually, who can really predict accurately S&P 500 or STI ETF after 30 years time? Though S&P 500 is more likely to survive rather then STI ETF.

Now beware!
i like to borrow a quote from Yogi (recently use by CW8888 on his blog).
"In theory, there is no difference between theory and practice. In practice, there is". (My 25 years of investment in the market tell me it is so.)

[safetyfirst]

I think we need much more detail. What kind of instrument? Who offers the instrument? How does it produce the 8% return? Why 30 years?

I have a feeling berkshire hathaway can achieve minimum 8% returns for a long time. Just buy and forget about it.

[rokcradle]

www.dqydj.net/sp-500-return-calculator
Thank you everyone!
i did a 1983 to 2013 using the above.
Wow! Awsome! If it can be authenticated by someone.

It looks correct. I remembered doing a 15 yrs annualised returns for S&P using bloomberg. It was 2-3%, similar to what the calculator showed. STI returns for the same period, if memory serves me right, could be ~10-12%. Need to go back office and check again

The only thing is can S&P 500 repeats the same history? Or America will decline like once "Great British Empire"? So is it not the same with Singapore & SGX, relatively speaking?
Another words is it a viable option to invest as suggested by the lecturer without "a care in the world" for 30 years?
The lecturer is not in favour to do the same with STI ETF.
To me actually, who can really predict accurately S&P 500 or STI ETF after 30 years time? Though S&P 500 is more likely to survive rather then STI ETF.

From my layman's simplistic understanding, a country's stock index returns is quite a good reflection of the country's nominal economic growth history. STI was able to deliver good returns over the past 20 years due to the economic success of the country.

If we are looking at purchasing country index funds, perhaps a good qn would be to ask which country is at the same position as Singapore 20-30 years ago. Naturally, China popped up in my mind. I remembered looking at the historical price chart, the irrational bulls were rampant in 2005-2006, pushing the index from 1,000+ to 6,000+. And of course, what goes up spectacularly usually also comes down spectacularly. My understanding is that the Shanghai index at the current level of 2,000+ is attracting the attention of some of my value friends. The currency story is also pretty attractive, I have to say.

[weijian]

If we are looking at purchasing country index funds, perhaps a good qn would be to ask which country is at the same position as Singapore 20-30 years ago. Naturally, China popped up in my mind. I remembered looking at the historical price chart, the irrational bulls were rampant in 2005-2006, pushing the index from 1,000+ to 6,000+. And of course, what goes up spectacularly usually also comes down spectacularly. My understanding is that the Shanghai index at the current level of 2,000+ is attracting the attention of some of my value friends. The currency story is also pretty attractive, I have to say.

Once, i read a commentary about the Chinese Stock Market that can be summarized as below:
(1) Chinese companies regard westerners' equity investments as interest free loans that do not need to be repaid (sounds suspiciously close to the Yahoo-Alibaba saga..but Yahoo eventually got their $ and profits back though)
(2) Rich Chinese never put their $ in the stock market. They only do so in their own businesses and of course, the property market.

As i do not have much experience about chinese stocks (besides been burnt by some s-chips), nor having worked/stayed in china on an extended period to understand the local vibe, i am unable to verify the authencity of these claims that the commentary made.

[HitandRun]

Based on my research, in the year 1970, GBP7=SGD60 and USD1=GBP0.4033 which implies USD1=SGD3.46. Compared to USD1=SGD1.24 at the moment, it would probably lop a couple of % off the annualised returns in SGD terms.

---

I just remembered something. If any VB is keen on understanding the various returns in the S&P 500 from 1900 to 2001, you may refer to John Mauldin's book, Bull's Eye Investing. Between pages 74 and 75, you will be able to find a nice table by Cresmont Research showing the annualised returns based on any time period that you may pick. Incidentally, the annualised return from 1900 to 2001 is around 6%.

[Jared Seah]

That's probably where this 8% average annual equity returns came from - often quoted by financial advisers.

It's the realm of John Bogle and passive low cost indexing funds and ETFs.

Never underestimate the power of data mining.

If you bought S&P during 1999 or 2007 - even S&P at now recent high; your return is merely breakeven after 12 years or 5 years of "waiting". There goes those wonderful years of "compounding effect".

But if you bought S&P on any other years, hey! You've made "nominal" profit - just don't adjust for inflation and currency effect (must give chance).

I would prefer to be lucky investor than a smart investor.

How many of us have another 10 or 30 years to wait to see if a "sure win strategy" works out?

[HitandRun]

I would prefer to be lucky investor than a smart investor.

SMOL

Agree, I would too! But since when do i get to choose? And it is also possible that I end up not so lucky AS WELL AS not so smart.

P.S. I love ur blog!

[Jared Seah]

Hello HitandRun,

Thanks for the kind words in tiny fonts. LOL!

Although I am not a "guru"; I would prefer to drive looking straight out the windscreen most of the times. Can't always look at the rear-view mirror right? Unless got hot babe in micro-mini skirt sitting at the back. Slap!

Who knows? We may increase our odds a little bit with a bit of common sense and imagination (plus lots of hope)?

The "guru" prefers S&P and not STI for the next 30 years? Interesting...

Since this century is likely to "belong" to Asia (Finally!!! Aren't we lucky to born in the right century?), I would assume buying an ETF on China or Asia ex-Japan for the next 30 years would be more rewarding.

To increase our odds of buying at a "fair" price, how about we split our monies into several buckets? Going all in is either saying I am a great market timer or me at my height of arrogance

Each time the market goes into a correction or pull back, I put in some money. A hybrid variation of the dollar cost average and market timing. No need to pick the bottoms; just buying below the peak I happy liao - I dumb retail money remember?

Then the rest is left to luck! Praying hard the year I call it quits is not 2008, 2002, 1997, etc...

Just singing out loud,
Equities man-whore

(Hmm... Man-whore and HitandRun; same same in a way. No?)

[wee]

Putting aside stock market fluctuations over time, business enterprises on aggregate should return an average of about 8%-10% annually. 3~% from dividend, 3~% from inflation, and 3~% GDP growth (the latter 2 arise from reinvested capital). If you believe Graham, stock market should mirror business fundamental over time.

Needless to say, this is different from saying, you can get 8-10% just buying stock indexes. Timing matters.