No. of Recommendations: 16
As a person in the early stages of retirement savings, who does expect about 8% returns, I have to ask, is he serious? Why exactly would that valuation be impossible? The rise from 66 to 16,000 from 1900 until now is the exact same “unbelievable” kind of change, not to mention BRK’s own “impossible” valuation currently. It just seems like a complete 180 from every other thing I’ve heard him say, any thoughts?


He's talking specifically about pension funds here. The DOW grew at 5.3% annually last century plus 2% dividends. If it continues about the same rate of growth it will be way less than 24,000,000 by the end of this century. 5.3% growth plus 2% dividends is much less than the 10% growth pension managers say they are planning on. Additionally, most pension funds have positions in bonds, which have a lower CAGR, so the equity portion has to perform at even a higher rate to make up for it. Not likely to happen. Hence his warning.
Print the post  

Announcements

The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement