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Subject:  Re: Up, down, sideways Date:  12/28/2010  11:15 AM
Author:  TwoCybers Number:  67987 of 100398

Andrew wrote a real return of 5% would do me just fine

If by real return you return beyond inflation, good luck. As far as I know that has not happened in any 30 year period, unless you are lucky enough to invest heavily in Microsoft in say 1984, Apple in 2000, etc. On the assumption you need some returns over inflation, I would suggest your past investment choices have not included many items like MSFT or APPL.

I tend to agree with the idea that volatility will be greater in the next 20 to 30 years, but I am far from confident in the prediction. What I am confident about is the return on equities world wide and in particular in the USA will be significantly less in the 2010 to 2040 period that we experience in 30 year period between 1930 and 2000.

There are two things that I commonly hear about investments which I know are flat wrong. #1 It is different this time. #2 What happened in the past will happen again. What I do believe is things will be somewhat or slightly different in the future. For example, in the late 1920s there was a rash of the same creative mortgage financing we experience in the 2004 to 2008 period. Both those items ended badly. In both cases there were serious banking system issues. In one case government did not engage in deficit spending for a period of 3 years. In one case there was a depression - 25% unemployment.

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