Saturday, January 30, 2010

Investing: Subject Index




The Declining Value of a Dollar: 100 Year History: Shows the dramatic decrease in purchasing power over time.
Inflation Calculator: Calculates inflation rate between any two years. Converts current dollars to/from prior years.
What Would $10,000 in 19xx be Equivalent to Today? graph to convert dollar amounts from any prior year to their approximate equivalent today.
How Much Will $100 be Worth in 10-20 Years? converts today's dollars to equivalent in future years.
100 Years of Inflation History: graph, + summary of impact of inflation on bonds, stocks, housing....
Inflation Calculator/Spreadsheet: calculates inflation rate and change in purchasing power between any two years -- e.g., between 1970 & 1980.

Tuesday, January 26, 2010

Projecting Stock Market Returns

What if We Could Predict Future Stock Market Returns?

Imagine that we could forecast whether our returns were going to be high, or low, before we invested. Imagine that we had an early warning system that warned us about upcoming bear markets or stock market crashes, and gave us a gentle heads-up when a bull market was imminent. This post is a step in that direction.

One important reason for doing analysis is to get insights that help us plan better. In the best cases, analysis results in an understanding so deep that you can predict the future -- or at least come very close under certain conditions. The obvious question is, can we use the results of the stock market analysis in the previous posts to help us make useful forecasts and plan our investments better? The graph below (click to expand) argues that we can.

Projecting 10-Year Stock Market (Dow) Returns

Stock market (Dow Index) 10-year forecast returns vs actual performance

In the graph above, each point on the solid blue line represents

Monday, January 11, 2010

Retirement Planning: The Distribution/Variability of 10-Year Returns

Another Look at the Risks of Planning Retirement Based Upon Average Stock Market Returns

In a recent post we reviewed the range/variability of stock market results over 20-year periods, and the likelihood market returns would fall above or below specific values. For example, how often have returns fallen below 6%? In this post, we'll do the same with 10-year returns.

Note: If you find the chart below difficult to digest, see the presentation in this post first

Historical Results of Investing in the Stock Market for 10 Years

Stock market 10-year performance showing variability & Dow return percentiles (probability distribution)
Retirement Savings: Distribution/Variability of 10-Year Returns

The graph above (click to expand), illustrates the

Friday, January 8, 2010

Graph Graveyard

I plan to update some of my graphs annually.  At least for now, I'll keep old versions here -- otherwise I'm concerned I will have a bunch of inbound links from elsewhere on the internet that don't have anywhere to go.