Interesting read. However, a buy-and-hold 30 years strategy is not per se the typical case (before pension). A more realistic scenario would be to "buy every month for 30 years" and evaluate the CAGR at the end of the period. This will move the expected reward more closely to the mean, as one basically takes 360 samples from the presented distribution (though every next draw has a 1 month shorter duration).
Agreed. This was my first thought as well while analyzing this. Unfortunately, the paper's authors have not covered this, and we don't have the raw data to backtest it ourselves.
But, we have some idea about how annuity investments would change the asset allocation compared to a 30-year buy and hold.
I now see table IA6 and IA7 on pdf page 70 give a sense of distribution for different time horizons. This could be used to approximately reconstruct an annuity investment scheme.
Stocks are generally a good long-term investment to hedge against inflation. Even though you might have a short-term impact due to the uncertainties surrounding inflation, great companies would be able to pass on the increasing price to the customers.
You must look into companies with pricing power (think Apple) to raise prices on their customers without significantly affecting their overall sales.
Hi, one of your subscribers, here :) Recently I've also developed a saas app for algorithmic investment. I'm interested in advertising it in your newsletter. Where can I get more info about such a deal?
Hi Jaewon, thanks for the interest, but we are not currently accepting sponsors for our newsletter! You can drop a note at marketsentiment.live@gmail.com and we will get back to you incase it changes in the future :)
Interesting read. However, a buy-and-hold 30 years strategy is not per se the typical case (before pension). A more realistic scenario would be to "buy every month for 30 years" and evaluate the CAGR at the end of the period. This will move the expected reward more closely to the mean, as one basically takes 360 samples from the presented distribution (though every next draw has a 1 month shorter duration).
Agreed. This was my first thought as well while analyzing this. Unfortunately, the paper's authors have not covered this, and we don't have the raw data to backtest it ourselves.
But, we have some idea about how annuity investments would change the asset allocation compared to a 30-year buy and hold.
Compare the results from page 76 to page 43.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3594660
I now see table IA6 and IA7 on pdf page 70 give a sense of distribution for different time horizons. This could be used to approximately reconstruct an annuity investment scheme.
Inflation will be the hurdle that prevents US investors from making real gains over the next 30 years.
It depends.
Stocks are generally a good long-term investment to hedge against inflation. Even though you might have a short-term impact due to the uncertainties surrounding inflation, great companies would be able to pass on the increasing price to the customers.
You must look into companies with pricing power (think Apple) to raise prices on their customers without significantly affecting their overall sales.
Hi, one of your subscribers, here :) Recently I've also developed a saas app for algorithmic investment. I'm interested in advertising it in your newsletter. Where can I get more info about such a deal?
Hi Jaewon, thanks for the interest, but we are not currently accepting sponsors for our newsletter! You can drop a note at marketsentiment.live@gmail.com and we will get back to you incase it changes in the future :)
Gotcha. Thanks for the reply, just dropped a note there! :)