Non-Political Market/Economy/Finance/etc. Thread

[steve dave]

This rough ridin' crap from Goldman about a decade’s worth of flat S&P returns is not cool, man.

pete, we're fine

https://x.com/awealthofcs/status/1848767831229243876

https://x.com/awealthofcs/status/1845828903996137514

[Pete]

eff yeah, thanks SD. There have definitely been a couple decades that were real stinkers (Great Depression, Great Recession), but hopefully we can avoid another global economic upheaval before I turn 85 (I would be first male on either side of my family to make it to 85, btw)

[wetwillie]

I'll take my financial outlooks from someone that didn't require govt subsidy to continue to operate thank you very much.

[Pete]

Here’s the speculative return ranges  in real terms for the SP500:

   
1.   Negative Annualized Return (<0%)
   •   Probability: 10-15% (higher likelihood than nominal)
   •   If inflation averages 3%–4% annually and nominal returns are in the 0%-4% range, real returns would likely fall below 0%. Stagflation or prolonged economic weakness would drive this scenario.
   
2.   Low Real Return (0%-3%)
   •   Probability: 30-40%
   •   Real returns in this range occur when nominal returns are moderate (4%-7%), but inflation erodes a significant portion. This is common during periods of average inflation and steady (but unspectacular) economic growth.
   
3.   Moderate Real Return (3%-6%)
   •   Probability: 30-35%
   •   This would require nominal returns of 6%-9% with inflation at its historical average. A scenario like this aligns with periods of stable growth and moderate market valuations.
   
4.   High Real Return (6%-9%)
   •   Probability: 10-15%
   •   Nominal returns of 9%-12% with controlled inflation (<2%) could deliver these outcomes. These periods often occur after economic recoveries or during technological booms.
   
5.   Exceptional Real Return (>9%)
   •   Probability: <5%
   •   Exceptional real returns would require very high nominal returns (12%+) and subdued inflation (<1%). Historically, these are rare and typically seen during explosive technological innovation or recovery from severe downturns.

Inflation’s Impact on Real Returns

Inflation is a key factor when considering long-term outcomes:
   •   High inflation periods (e.g., 1970s): Even with decent nominal returns, real returns can drop significantly.
   •   Low inflation or deflation: Nominal returns tend to translate closely into real returns, increasing purchasing power.

Summarized Likelihood (Real Returns)
   •   Negative real return (<0%): 10-15%
   •   Low real return (0%-3%): 30-40%
   •   Moderate real return (3%-6%): 30-35%
   •   High real return (6%-9%): 10-15%
   •   Exceptional real return (>9%): <5%

This is ChatGPT’s opinion when asked to speculate about real returns for the SP500 for the next 10-12 years.

[Pete]

What prior time period is most analogous to today? I WANT to believe that 2025 like 1991 and we have a decade a head of us of exuberance and inflows, but can’t escape the feeling that 2025 is more like 1998 or 1999

Year,S&P 500 Total Return (%)
1985,31.73
1986,18.67
1987,5.25
1988,16.61
1989,31.69
1990,-3.10
1991,30.47
1992,7.62
1993,10.08
1994,1.32
1995,37.58
1996,22.96
1997,33.36
1998,28.58
1999,21.04
2000,-9.10
2001,-11.89
2002,-22.10
2003,28.68
2004,10.88
2005,4.91
2006,15.79
2007,5.49
2008,-37.00
2009,26.46
2010,15.06
2011,2.11
2012,16.00
2013,32.39
2014,13.69
2015,1.38

[Pete]

What’s the best case for hitting the historical average for the SP500 annually for the next decade?

In my opinion it has to be vast creative adoption of AI in ways that we may not be imagining presently. Uses that really do create new market offerings and/or huge productivity gains for large companies.

There would also need to be new investor entrants to the market, wouldn’t there? Lots of people are saying “there is very little money on the sidelines” but I have no idea if that is accurate.  Where does the money come from to keep hitting at least the historical average return?

[mocat]

I WANT to believe that 2025 like 1991 and we have a decade a head of us of exuberance and inflows, but can’t escape the feeling that 2025 is more like 1998 or 1999

what bubble is about to burst?

[Pete]

I WANT to believe that 2025 like 1991 and we have a decade a head of us of exuberance and inflows, but can’t escape the feeling that 2025 is more like 1998 or 1999

what bubble is about to burst?

The talking points are typically that valuations are currently too high and that there is little money left “out there” to keep things escalating in value.

So would argue that crypto is the “bubble,” but I suppose you could argue the opposite side and say that if folks cash out of cryptocurrencies they may move to stonks and lift the SP500?

[Kat Kid]

No one, least of all ChatGPT, knows.

[Pete]

No one, least of all ChatGPT, knows.

Oh I wouldn’t say least of all.

[michigancat]

When did chatgpt get updated data? I thought they were a couple years behind

[Pete]

When did chatgpt get updated data? I thought they were a couple years behind

Nah, the latest models search the web and aren’t stuck on the last round of training data. Think of it as a news and opinion aggregator. You can ask it to speculate on all kinds of stuff and give you percentages then ask why it chose those percentages (though it usually gives you the full breakdown of reasons).

[Institutional Control]

https://x.com/ChrisJBakke/status/1932311114521747798

[Pete]

https://x.com/ChrisJBakke/status/1932311114521747798

LOL


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[Stupid Fitz]

https://x.com/ChrisJBakke/status/1932311114521747798

LOL


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Pete!!!!!!!!!!!!!!!!!

[wetwillie]

Holy eff welcome back

[Pete]

Holy eff welcome back

I was “detained.” Good to be back. The Cuban sandwich’s at guantanamo are good!


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[CNS]

Holy eff welcome back

I was “detained.” Good to be back. The Cuban sandwich’s at guantanamo are good!


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Congrats on the love making.

[Katpappy]

Holy eff welcome back

I was “detained.” Good to be back. The Cuban sandwich’s at guantanamo are good!


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Congrats on the love making.

prison slang?  LOL