Period: 1975-March 2017
Fascinating: Everyone is afraid of the BIG BLACK SWAN. Even if this animal may only occur once in a time-period of 42 years. Isn't life much too short to be afraid of ONE Black Swan? Think about it ;-)
Sometimes a chart says more than a thousand words, but well there are exceptions. Bankers used to say one should stick to a portfolio with 60% stocks and 40% bonds. I just want to mention that Bonds usually rise, when interest rates fall. Just a short reminder, that interest rate fell from 1990 onwards...to a low level (where we are just now)...
Warren Buffet enjoyed a nice ride, since the US-Stock Market kept on rising from 1975 until March 2017 under a pretty low INFLATION-regime, backed by the US-Federal Reserve. Therefore being a US-Investor with a HOME-BIAS definitelly paid off in the last decades!
An annual compound average growth rate of over 10% over the last 30years + is not a bad annual return - I hope you will agree ;-) In following table you will find the Statistics over the mentioned time-period (all figures before inflation deduction - of course).
So, let's find out, if it will make sense to avoid a once in a 42-year-timeframe BLACK SWAN Event...in the upcoming period 2018 - 2050 (32 years). Disclaimer: Maybe we will have even two Black Swans flying by? Who knows..
No Risk, No opportunity
Wishing you all the best !
Stay optimistic, but realistic (No risk, NO gain)
Ralph Gollner, 22nd April 2017