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Author: sdlipps Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75335  
Subject: Re: TSP or Foolish Four? Date: 11/9/1999 11:59 AM
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Greetings again,

TMF Pixy, you responded most helpfully to my retirement questions over a year ago, but my query now turns to historical market returns. If I am to try to come up with a "reasonable" average to project for the future, let's say for the S&P 500 (or an S&P index). Where can I find such a number?

Wouldn't a compounded avg. (cagr) with return info from as many previous years as possible give us the truest "average" return be it for the F4 or any approach for that matter?

You mentioned historical market averages of 10-11%, but aren't those for the entire market? I would think that an index of the top companies like those in the DOW or the S&P would come in historically averaging higher than the whole market, no?

We discussed the Market and the after-tax Foolish Four returns over the past 20 years which are frequently cited at the Fool. I wonder why the Fool would look at such a relatively short blip in trading history. (I see numbers frequestly cited only back to about 1961...is there some reason to only go back that far?) As you said in your reply.... if you expect the "16+% over the next 20 years based on the past 20 years,... you will be sadly disappointed. It hasn't happened historically and I see nothing to suggest these heady highs will persist indefinitely." Does that prediction go for the F4's 30+ returns of around 19% too?

You've hit the nail I was pondering squarley. If we can't expect the average(s) of the last 20+ years, what can we expect? Won't looking at a larger section of history give us a more tempered prediction for the future?

Thanks, -sdlipps

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