Perhaps a hot take, but I’m having a difficult time seeing a consistent rate of return on a raw number scale.
The logical conclusion of index funds always being successful is dealing with exponential growth that is ‘expected by investors’ to reach and break through the quadrillions.
Unless I’m missing something, is there not a point in which there is simply not enough money to support the new 7% expectation?
For instance right now $2.2 trillion would have to be invested into all of the S&P500 to meet the average of 7%. But in 50 years, if the market cap were $1.04 quadrillion as expected, it would take $65 trillion to maintain the same effect.
Assuming inflation in the US is stable around where it is now, consumers and perhaps even companies wouldn’t be able to invest enough to build the 7% return that they initially invested for, given that the requirement for it is exponentially growing.
(Market cap calculations used for 50 years out is multiplying by 29.45, which is 1.0750)
Submitted March 17, 2021 at 05:15PM by moneyshake10 https://ift.tt/3cHLAzT
