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Author: peteyperson Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5069  
Subject: Re: FIRE Benchmarks Date: 9/23/2003 2:32 PM
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>> This only holds if you realy think that US markets are more over-valued than they were at any time in the past hundred years or so. I don't know about you, but my crystal ball is in the shop. Since that is the case, I believe that historical experience is probably a reasonable guide to the future. If you disagree, fine, but don't present your guess about future returns as fact.

The likely future return being lower is due to current overvaluation. Many knowledgeable people understand the connection between overvaluation and lower future returns. You're sort of hoping it all evens out in the wash, however as markets become more mature future returns will naturally lower over time.

>> This may be true, but only if what you are diversifying into is less overvalued and uncorrelated with US markets. Given the increasing tendency of developed markets to trade together, I think that one should probably devote considerably time and analysis to see if ex-US stock and bond holdings make up for the increased cost these investments would entail.

It is entirely possible that other investments will deliver lower than historical performance, in fact I would plan for that. Planning for the best case scenario and being FIREd when results prove over time to be less than the best case is risky. Especially with the tendency for markets to mature and deliver lower returns over time because their markets are less risky now.

Petey
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