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URL:  http://boards.fool.com/calling-4-optimistic-is-misleading-it-survives-25012928.aspx

Subject:  Re: The Net Worth of American Households Date:  1/8/2007  2:15 PM
Author:  Lokicious Number:  19354 of 35367

Calling 4% optimistic is misleading. It survives most 30 year periods of the last century or so. It represents planning for a near worst-case scenario. You can certainly argue for a more pessimistic view, and I might even agree, but 4% is pretty pessimistic in its own right.

I've said many times that the assumptions behind using historical statistics, even including "worst case scenarios," to predict the future is fundamentally bad research methodology. Historical statistics are effects not causes, and unless there is a thorough understandning of the complex and changing causes of those effects any attempts to build models to predict how those effects will change as causes change in the future are useless.

The last century, and even the century before it, were times in the US and other now developed economies of expanding populations and expanding resources, notably per capita energy use, as well as increased productivity due to science and technology. Population and resources are both likely to lead to much slower growth in currently developed economies, including the US, in the 22nd Century. It may or may not prove possible to sustain something we might call quality of life with greater reliance on information technologies, etc., which may allow less energy use, for example. But how that translates to "growth" in the sense that leads to the kind of return on investment that has been seen in the past is a huge question mark.
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