Are there any?
Everybody seems to be pretty confident that the stock market, as a whole, will trend upwards over a long period of time. This is why it is highly recommended for novice investors to dump all their money into VTI/VOO and forget about it for decades.
If I dump money in VOO/SPY, what are the precise reasons that place so much confidence in the idea that its value will be substantially higher in 10-20 years? Just looking at the years 2000-10, the stock market didn't really go up.
I'm not sure if I'm thinking about this the right way. Correct me if I'm wrong, but the only way it can consistently go up is if the underlying companies continually beat expectations. After all, a stock price is supposed to represent the sum of all EXPECTED discounted cash flows. Growth is one thing, but you have to grow beyond the expectations of growth in order for a stock price to increase (if the price indeed is a representation of consensus expectations). But how can this possibly go on forever?
I'm also not sure if I'm thinking about index funds the right way. Even if we grow as a society through consistent technology innovations, the only way for SPY to grow would be for its underlying 500 companies to grow in value. Doesn't this mean that even if our country continues to grow as a WHOLE, I won't necessarily achieve any returns on SPY unless those top 500 companies increase in their market caps as well?
I really want to dump most of my money into a passive index and forget about it, but I'd like to be more convinced. I might be an idiot, I can't quite comprehend how there can be a guaranteed systematic reason for the stock market to go up over the long term.
Submitted February 13, 2018 at 12:43PM by Boostafazoom http://ift.tt/2Gb7Kcb
