Market Returns

Russell Kinnel, director of mutual fund research at Morningstar, recently compared investor returns at Vanguard to investor returns at Fidelity. His study is interesting because it looks at investor returns (aka “dollar-weighted returns“) rather than investment returns (aka “time-weighted returns”).
A brief example of dollar-weighted returns
If Mutual Fund ABC earned a 25% return in Year 1, [...]

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A bit of a different post today: I wanted to share a spreadsheet that I maintain, which includes a good deal of data regarding historical stock and bond returns (in the U.S.).
Click here to download the spreadsheet.
Historical Return Data Included:
If, for example, you wanted to know any of the following, you could find it in [...]

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For whatever reason, anytime somebody brings up index funds one of the bigger personal finance blogs (like The Simple Dollar or Get Rich Slowly), there tends to be somebody in the comments who says something to the effect of “Index funds failed investors over the last decade.”
I can’t tell you how much this frustrates me [...]

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As they say, you can drown in a river that has an average depth of 6 inches (should you attempt to cross and find that, at this particular point, the river is 8 feet deep).
Similarly, investors must be cautious about data regarding average returns offered by investments.
For example, if an investor were to look look [...]

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The concept of expected return is one that plays a vital role in just about every topic within the field of investing. Yet my (entirely anecdotal) experience suggests that many investors are unclear on what, exactly, “expected return” means.
Expected return is simply the sum of each of the possible outcomes, multiplied by its probability.
For example, [...]

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One benefit of Oblivious Investing is that you can take an “I don’t know, and I don’t care” attitude about market swings and short-term market results. It’s quite freeing when compared to investment strategies that put you at the mercy of the month-to-month whims of the investing public.
Long-term market returns, however, are another story. There’s [...]

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In a comment on a recent post, Ethan gave one of the best explanations I’ve seen for why long-term returns are predictable, and short-term returns are not.
Here’s my attempt at explaining the concept visually. It’s not exactly action-packed, but hopefully it’s easy to understand.

Long-Term and Short-Term Stock Market Returns from Mike Piper on Vimeo.
Summary of [...]

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In the world of investing, there’s so much data available that it’s essentially impossible to look at all of it. Instead, we have to examine only a small slice of history at a time. Unfortunately, by carefully selecting which slice of history to look at, people can “prove” just about anything they want.
For example, I’m [...]

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Does anybody happen to have any idea where I might be able to find up-to-date info regarding long-term gold returns? I’ve been searching online for a few days now and have had very little success.
Something like an updated version of the data in Jeremy Siegel’s Stocks for the Long Run would be great. Best-case scenario [...]

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As you know, the whole point of this blog is to encourage people to focus on the basics of investing while ignoring everything else. So for today we have the two fundamental factors in determining investment return.

How much money is the investment expected to pay?
How predictable is the payout?

It really is quite simple, but a [...]

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