Do Stocks Return 10% on Average?

Meet with PWL Capital: calendly.com/d/cpws-jyp-znp
Many people take it as a given that stocks return 10% per year on average, but on closer inspection this belief is likely an error.
References: zbib.org/3f0f46d1692f45aca809...
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[@MikesGlitch]

Ben Felix doesn't need investments to promise high returns, he just stares them down until they give him the return he wants

[@ciaoatutti11111111]

Is he the new Chuck Morris?

[@He787878787787]

I just copy and paste what Ben Felix says to my friends and they think I'm a genius.

[@BenFelixCSI]

😂

[@alessandromassimo5717]

Ahahahahaha me too but to my dad and he thinks I am a financial genius

[@BenFelixCSI]

That’s very funny. You’re welcome.

[@InfinityDz]

people believe Elon Musk is a genius lol, doesn't take much

[@DiscoFang]

Have you copy and pasted his steely, yet embracing, gaze? Are your friends ready for that?

[@rob8582]

No, Dave Ramsey says to use 12% instead!! 😂😂

[@Mr.Jack_learning]

😂

[@joshsantos9965]

He’s so far from reality it’s scary

[@krdxz]

Hahahaha. Dave Ramsey: "Pick the funds that beat the market average. It's not a rocket science." :)

[@gimusk5667]

His mutual funds beat the market, just pick those!!!! Lol

[@joshsantos9965]

@@krdxz I hate him lol

[@serialcycleur3747]

Ben Felix, my best personal advisor, for free. You re doing a great job!

[@BenFelixCSI]

Thanks!

[@rui569]

Right! What a gift this man is.

[@StephenGrinwis]

I initially went through a ton of research and effort to verify what he was saying. I now take 'Ben Felix said it' as evidence enough to a things correctness.

[@smallpeople172]

Ben Felix returns over 10% on average, so the market must catch up

[@kjw79]

Ok, I had to pause his video to read these top tier comments ✨👍

[@Mr.Jack_learning]

Thanks for being a "no flash" informative toutuber. Sight for sore eyes

[@BenFelixCSI]

I think I'm too "no flash." I'd like to get back to having animations at some point.

[@Unknown-jt1jo]

@@BenFelixCSI The animation were cool, but your content is still A-tier. You're one of the few finance experts I trust implicitly.

[@Julian-pc8tu]

@@BenFelixCSIyour videos are great regardless, but I do enjoy the animations

[@thursdayblack]

​@@BenFelixCSIanimations can add to understanding, especially when trying to convey pretty complex relationships or numbers

[@TroyWon-xq7wi]

Always excited to see when you upload!

[@BenFelixCSI]

Thanks!

[@afihaileywibowo1095]

Yes, please if would consider do it more often for us still learning invesments😅🙏❤

[@KrisoVT]

Ahhh the daily reminder that I will retire 5-10 years later than I hoped

[@BenFelixCSI]

😬

[@nah82201]

You’re gonna get to retire? Some people have all the luck. 😅 🍀

[@amancioescuderopicker358]

😂😂🤔😮😢

[@youtubesucks8024]

50. 50 tears later 😭

[@theforce5191]

It's possible,

[@kellyspaghettti]

Always stoked to see a Ben Felix vid ❤

[@sopcaja]

As always , Ben delivering high quality material for free. And thanks for explaining very well the rear view mirror bias about rising valuation and expected return

[@user-wb8fd1kp7y]

Mr. Felix: from Brazil, congratulations for a job well done for the years I am following your channel! Thank you very much, indeed!

[@georgiosvavliaras1066]

Thank you once again for the great work brother!

[@ironcito1101]

So, if I understood correctly, stocks in general should be expected to provide average annual real returns of ~5%, even though US stocks have been outliers for the past ~70 years, providing average annual real returns of ~7%.

[@BenFelixCSI]

Good summary. Agreed.

[@darkorodic638]

@@BenFelixCSI Would this make entire US economy as a something of a bubble?

[@alponcho7]

@@BenFelixCSI great video! Do you mind sharing the research you found that reflects that current valuations correlate with future returns? I’ve just come across mixed to no evidence but always looking to learn! Thanks

[@HermanWillems]

@@darkorodic638 Or the most profitable?

[@aba192]

@@darkorodic638 idk about bubble, but implies US equities are priced for perfection (ie; not risk adjusted for market affecting events which might happen)

[@ohjeohje3462]

I like these videos. They are like a short summary of the corresponding rational reminder podcast episode.

[@wasabibottomboys1623]

Ben! I love your content and your outlook. It helps me sift through financial news and buzz and feel overall more informed. Your rent vs. buy videos were instrumental in my family making our decision. I think you do a great job balancing research and more advanced concepts, but still breaking it down for the average person. All that said, a bit of feedback! Your content is fairly dense (that's why we like it), but for that reason it really would benefit from more visualization. It can be hard for the average person to digest a lot of figure-heavy content without a visual aid. Cheers

[@BenFelixCSI]

I hear you. Right now I do all the editing myself, and I don’t have any animation skills. We are looking for a new editor. Thanks for the feedback.

[@antipode_ghost]

Oh-oh. There goes another channel where a knowledgeable person says interesting things. Flashy memes, stock imagery, and clickbait titles incoming...

[@simonlynch4204]

@@BenFelixCSI Have you tried to outsource the graphing to chatgpt? you might be able to give the bot the data and ask it to produce graphs...

[@Willifog72]

@@BenFelixCSIthat’s great news Ben. Now if all my friends and family could understand English, it would make my work so much easier!

[@matiasiozzia9547]

Solid content!. Thanks Ben!

[@stevem6047]

If Dave Ramsey watched this I'm pretty sure his head would explode, if he could listen.

[@DiscoFang]

Nah don't worry, he would have muted and then talked over Ben after a minute or so. Ranting is his head pressure release mechanism.

[@thomas6502]

Thank you Ben!

[@majorfallacy5926]

Thanks, this is a great resource to point people who spread bad info about expected returns to

[@Joao-eg9cv]

I'm learning a lot from your videos. Hugs from Brazil

[@antonkollaps8080]

Thanks, Ben, for another video

[@Tobi_Jones]

great video, learned a lot, thanks!

[@EtTuSilver]

As a US investor I'd happily take a real 5.57% return on my stock allocation as evidenced from the 1900 - 1950 period of performance. I'd take that all day every day with a smile on my face.

[@BenFelixCSI]

Agreed - that is a very nice return.

[@mouisehay930]

​@BenFelixCSI do you calculate real returns using the CPI? Some claim it understates inflation. (Esp if you want to buy things excluded from the basket)

[@TheFirstRealChewy]

A real 5.57% return is pretty decent if you have a good amount already invested.

[@LifeStartsAtrpm-ru1xo]

Maybe 5.57 % is enough in the US, but here in communist EUSSR (The Netherlands), inflation and taxes are so incredibly high that at least 10% growth is needed to be retired comfortably at an acceptable age.

[@mouisehay930]

@LifeStartsAtrpm-ru1xo and this is the thing, it pushes people out the risk curve into equities. Bonds become a risk asset as real returns are negative.

[@skzion2]

A nice precis of your recent Rational Reminder show.

[@santiagoeguren6837]

Dear Ben Felix, you are the best!!!

[@spicy_xinger]

Geez if there were ever an episode that deserves to be the face of Rational Reminder

[@BenFelixCSI]

We covered this over there too! kzbin.info/www/bejne/aaa1i2qFnMyGd9ksi=ZYEY83EXgEXBy45N

[@someguycalledcerberus9805]

Come on Ben, let a man dream 🥲

[@doug2731]

Nope! Once again crushing any remaining optimism for our portfolios :(

[@steveno7058]

Comparing the USA from 1900-1950 to 2024 is insane. How can you say with a straight face that the USA is even remotely similar from over 120 years ago. USA has had big returns because it is a powerhouse of innovation and execution and friendly government regulation and monetary policy

[@dk2709ic]

I see Ben. I like and comment before even playing the video.

[@_BoomShakalaka_]

Thank you Sensei 🙏

[@luizpalma1627]

Excellent vídeo! Underrated channel! I am from Brazil, but have global assets. Focus on buying VT (80%) and irish EMVL (20%) ETF, cause it is so cheap. I use ACWI as benchmark. Best channel on finances.

[@davidblack6413]

Ben, another virtuosic video, and offering perspective on my own pattern of being "overweight" US in the portfolios I manage for family and friends. Thanks for putting eloquence, analysis and data to work for those who follow your work avidly. I'd love to see you speak to the question of bonds, be they government or corporate, and whether they are "broken." That is, do they negatively correlate with stocks anymore, reduce the volatility in portfolios, and the other usual claims about bonds, or are they no longer and less likely to perform as they have historically? I know it's usually a bad idea to claim anything is "different" now where market behaviour is concerned, since anomalies usually wash out as long-term patterns reassert themselves. That said, please consider addressing the state of bonds and fixed income in general as a feature of portfolio design.

[@FlyingFlaneur]

Just watched this one again. Ben is such a boss.

[@halcyonity]

@BenFelixCSI please do a video on “Does size matter (in value investing)?” Avantis has too many options with AVLV, AVMV, AVUV (first world problems). Thank you!

[@goldenwhang]

Fantastic video

[@sleepless2541]

I run my own expected return estimates, I first run a regression on historical CAPE and it's forward 10 year real return then add up inflation to find Nominal expected return, then I average estimates by vanguard and state street with my own estimate to get a more realistic sense of how much return is to be expected (in case I'm biased). I then add up factor premium based on historical portfolio loadings and a discount of the premium by 40% to account for post-publication factor decay. I then account for fees and taxes in order to get a net expected return estimate. Using this to help plan my retirement portfolio and my dad's.

[@OptimisticHominid]

Ben, thanks for more great info. Will there be a 2024 update of the 'Expected Returns - 2023 Update' on the PWL website?

[@stonks4days1]

Favorite financial scientist and I always look forward to your content bud. So when can we expect a PWL global equity or global factor ETF managed by Ben Felix and available to the US? I don't think AUM would be a problem for you guys if you did. I would scoop up some shares to support if available on the US market.

[@thomasmerx8315]

Find this channel very informative, thank you so much for spending the time and energy ! Would be interested in learning more about the following: Future valuation is a major driver of future returns, are valuation multiples like p/e, ev/ebitda,… mean reverting and/or is there a structural upward drift of equity valuations due to - for example - lower transaction costs which implies lower cost of diversification making equities more attractive than bonds today vs. the past ? Many return prediction models I see often imply steady valuations or a return to a long term mean, but is that a sensible assumption to make ? Happy to discuss ….

[@daanishdan318]

Hi Ben, Would love your perspective on the change in the Japanese CB policy and its potential impacts ex. on international cross currency carry trades.

[@Lee_Aeon]

Hey Ben. Could you please do a video of the advantages and disadvantages of paying up a mortgage. And when would it be a good idea to actually have a mortgage depending on a level of income. I think there are a lot of confusing videos online about paying up mortgages, or closing them entirely. I have watched on the rational reminder podcast a similar video, but it would be interesting to see one it on your channel too. Thanks Ben for insightful videos, been watching then for YEARS. 😊

[@ender944]

Hi from France Ben and thanks for your video , top as usual. You talk about total return expectation on the US market which is lower due to the current market valuation compared to history. But as far as I know this is specific to US large value ? If we talk about Us small caps, or even better US value small caps it is not the case, right ? Even if we talk about US Value big caps I think it is also different ? Could you please confirm this point ? Thanks !

[@speucey]

What is the more reasonable expected return for small cap value stocks? (i.e AVUV, AVDV)?

[@patienceisalpha]

That's why my portfolio tracks an All World Index. I use VT as a basis. Keep fees low but buy the biggest haystack you can. Not the QQQs, not the sp500, not the US TSM, THE ENTIRE WOOOORLD😂🎉

[@InfinityDz]

what's the Canadian equivalent? I use VVL but I'm not sure that's the right choice

[@patienceisalpha]

@@InfinityDz there are plenty of good options, xgro I remember is a good one from blackrock

[@patienceisalpha]

@@InfinityDz Google "Canadian couch potato" they have good model portfolios with low fees.

[@irishboy664]

​@@InfinityDzassuming OP means equity, then probably something like XEQT/VEQT

[@InfinityDz]

@@irishboy664 Oh! I do have VEQT, I thought it was only Canadian stocks. I suppose I'll have to review some choices then, thanks.

[@SA-vvvvvv]

Great video as always ! Can you please make a comparison with real estate expected returns. It seems almost all the workd real estate markets are running high everywhere. It seems the baby boomers experience a real estate buy low in their youth and sell high at old age despite really bad demographics ... in the west at least. I would really like to hear your opinion on this

[@hasanathrashid]

Thanks for the great content Ben 👍🏾. When you say “nominal expected 7.42% assuming 2.5% expected inflation” if inflation stays higher for a longer period could that result in a higher nominal return and vice versa?

[@luis_g_77]

I feel rationally reminded

[@SANJ0288]

Hey Ben can you do a video about if the average person needs a Financial Planner? What are the advantages (if any) what are the disadvantages. Do those with CFP designation add any value or should we only use advisors with CFA designation only.

[@MoementumFinance]

Super insightful 👌 I am investing in ETFs giving me a globally diversified portfolio, while managing my expectations for the returns. Thanks for sharing. 🙏

[@Alberto-2112]

It's a tale as old as time, unfortunately all this great info requires attention, skepticism, willingness to accept "but"s, whereas on the other hand it's so much simpler for anyone to just go out there and say" invest in the stock market and make 12% a year". Keep up the good work Ben, hopefully this great content will reach more and more people!

[@TiagoRamosVideos]

Very interesting 👌

[@PaterUrsa]

Fair to plan conservatively and be pleasantly surprised at unexpected extra returns?

[@privacyowl]

Does PWL publish the methodology of how they estimate expected returns? I wish to use the same for my country (which is not the US or Canada)

[@RikuRikuMr]

Hi Ben Thank you for the excellent video and comprehensive analysis! I was particularly interested in the section where you discuss the returns of US stocks between 1950-2023 and 1970-1985. Unfortunately, I couldn't find the return figures you mentioned in the sources I checked. Could you kindly share the source from which you obtained this information? I would greatly appreciate a more detailed reference or source material to review it further. Thank you in advance for your assistance, and keep up the great work! And greetings from an active follower of yours from Finland.

[@00dfm00]

Hey can you do a video on the alternative inflation measures and give proper analysis of those including pros and cons and how that affects the average person in the real world (i.e. how we actually experience things). The US BLS uses things such as 'hedonic price adjustments' and such which I think drastically and unfairly reduces the official CPI measure.

[@umbertopappalardi8667]

Ben Felix is protecting me from doing stupid things and chasing unrealistic returns. Thank you for your priceless contribution to the community 🙏🏼

[@theforce5191]

You can make more than 10%. It's not unrealistic, but you need to practice a ton.

[@kenwen7791]

​@@theforce5191Like how? Is timing the market easy?

[@samphelps856]

Thank you

[@meibing4912]

Great walkthru. I run several calculations for my retirement. Even just including sequence of return nulifies the optimistisk predictions many people have. I am also careful to always use geometric averages. Could have been clearer on dividends - think you said they were included in your numbers. But I did not hear anything about wether reinvestings those dividends was taken into account?

[@BenFelixCSI]

Yes these are total return indexes, which include dividend reinvestment.

[@boombustinvest]

Does PWL have any kind of "sequence of returns" indicator showing relative SoR drawdown probability or risk based on stock market valuation?

[@boglehead5822]

Hi Ben, is an equal weighted S&P 500 a better approach with the current high valuations of the market cap index?

[@BenFelixCSI]

I’d personally prefer intentional tilts toward smaller and cheaper comp ones than equal weights.

[@diegofederici]

Hi, you mentioned the "block bootstrap" method for simulating stock returns. Where can I find an article describing the method for financial applications? Thanks!

[@BenFelixCSI]

papers.ssrn.com/sol3/papers.cfm?abstract_id=3964908

[@ehochmuephi8219]

@@BenFelixCSIGod damnit ... Ben Felix is just too good ... thanks as always for the great video.

[@andersneldebergnielsen4972]

A further item to consider in returns is the effect of taxes, which will also reduce the net return. However this is difficult to factor in due investor profile differences

[@DiscoFang]

Yes a many varied thing. But it really should be considered and talked about more. It can make a huge difference over the terms we're talking about for retirement. Property investing over the long term is one area you need to account for the tax scenarios that can become real advantages when compared to stock or equity investing.

[@anywhereroam9698]

Please evaluate Australian real estate vs stocks.

[@thursdayblack]

Ben a question; considering the high valuation of the US market, and that this means lower expected returns, could an overweight towards other markets be a good idea? Like a form of geographic value-factor

[@wunderburst6444]

YES, a perfect video for this Friday. You and your podcast has taught me a lot ❤

[@trs8696]

Hey Ben, another great video. What do you think of the idea that the risk premium is declining because we have now had a global financial crisis and a pandemic that both resulted in governments dumping tonnes of money into the financial system? I'm an investor and that definitely makes me feel that markets are less risky than they once were (hence I'm happy with a lower risk premium, because there's also just less risk)

[@BenFelixCSI]

I agree with all that. It’s related to the points about discount rates in the video.

[@TheJamonLance]

There is a hypothesis that i am testing. To which extent is stock return for the main indices explained by capital inflows from pensions and to which from foreigner inflows. With rapidly changing demographics, where younger generations have to expend more on their housing and generally save and earn less compared to the cost of living to older gens, should we expect lower inflows of money in the public equity markets, and how this change will impact the return long term. Also in a fragmented world, to which extend do we expect foreigner inflows to slow down, and how this could hinder the long term growth.

[@tarekyared4404]

Thank you for posting this video. A lot of people who keep referring to S&P 500 returns of "12% on average" as an argument to throw every dollar you save in the SPY need to watch this video. As mega caps continue dominating, it will be harder and harder for them to continue valuation trends and expecting those types of returns on a real basis is just totally unrealistic and borderline insane.

[@jackf3619]

You’re assuming those companies that make up the sp500 won’t change

[@TheOOOOOOOOOOOOOOO]

But it's been insane for the last 20 years. Why stop now?

[@stevenbrady440]

As of today, Thursday, March 28, 2024, over the last 10 years the S&P 500 has returned more than 18.2%.

[@BaileyMxX]

​@@jackf3619 well any new additions will need to catch up quick if the top 10 holdings suddenly slow down returns or even decline in value. You can see that right? Imagine MSFT and Apple lose 500BN each in a year in marketcap. Suddenly we need 1TN to be gained elsewhere in the index just to break even

[@Andrew21882]

@@stevenbrady440 just look back at the decade 2000-2010, S&P 500 was flat no gain for 10 years, history likes to repeat itself.

[@evilbred974]

Hey Ben, What do you think about Canadian stock potential going forward? With the massive labour market productivity differential between Canada and US, could it be argued that further returns in the US could be diminishing returns, as easy efficiencies are harder to come by; while chronic underinvestment in Canadian businesses have created opportunities for capital investment to achieve greater real productivity among Canadian companies?

[@BenFelixCSI]

I think these comments make sense. We know empirically that high per capita GDP growth is unrelated to stock returns, plus Canadian stocks are very cheap relative to US stocks.

[@steveno7058]

Sorry but in 1900 there was no such thing as quantitive easing and other monetary policy that boosts the stock market. No way am I using data from 1900 to predict what will happen for the next 30 years

[@genzinvesting8405]

Ben, in the US markets today the S&P has forward projected earnings growth of 8%-9% with a 1.5% dividend yield. Assuming no multiple expansion F-F would say the expected return for at least next year is about 10%, nominally. Agree that lower discount rates have pushed up valuations, but doesn’t it seem impractical to suggest the higher margin and more productive business of today should fall back to pricing structures of 1900-1950? I believe French also acknowledged the limitation of the model given it did not account for stock repurchase as dividends, nor does it account for profit margin expansion. Appreciate the work you do on your channel

[@knightfamily8124]

I would love to see if and how much of a correlation there is between the more recent rise in valuations and the move of money into 401k plans. Does all that cash flowing into funds force a rise in valuations simply due to the volume of money needing a place to go? Or am I thinking about it wrong

[@BenFelixCSI]

This is a topic of current debate. Some practitioners agree with you. Academics who study the questions don’t tend to agree.

[@WhatIsThis-zq4hk]

I continue to have a globally diversified portfolio, with a heavy tilt toward small cap value.

[@WensGamingExperience]

What is the best fund that tracks this, may I know?

[@WhatIsThis-zq4hk]

@@WensGamingExperience VTI, VXUS, AVUV, AVDV

[@ehochmuephi8219]

@@WensGamingExperiencereally depends where you are located. I checked out the etfs available in my country on justetfs and took it from there. They have pretty good filters, even for banks. Good Luck, it is really not so bad. Just gotta search a little bit.

[@phuocle]

What about any premium for the USD being the world reserve currency? If I recall, it was in 1944 at Breton Woods that it was agreed that the USD should be the referenced currency. Seems like a mighty big coincidence that US stocks post 1950 did markedly better than they did pre 1950. How much that is worth I have no clue but it must be worth something no?

[@BenFelixCSI]

Possibly. Strengthening USD would increase US stock returns for foreign investors but not directly for USD denominated returns. It could contribute to the overall safety of the U.S. market.

[@johnkenney7217]

@@BenFelixCSI Methinks Original Poster is onto something. Any other countries where, that country causes a giant worldwide financial crisis, and the rest of the world rushes to buy that country's bonds hand over fist (2007-8)?

[@hermes8258]

The only constant is change - I see rumblings of Russia, China and India moving away from USD. And didn't KSA do so also? Are they still petrol 'dollars'?

[@TheRc0211]

Ben could you please share your thoughts alternative ETFs like managed futures and hedge fund ETFs?

[@BenFelixCSI]

Not a fan. Simplicity is the answer for most people.

[@axsup7g140]

Always when I want to enter the stock market the valuations are too high...! 😞

[@Drmonstereater1]

This is frightening TBH. As a person investing something along the lines of 1/3rd of my income after employer paid benefits, this puts my usual projections from way over what I might need, to basically just meeting what I will need. And I know I’m in a better position than most others. It seems like our expectations of retirement are doomed to be thwarted. It would be interesting to hear your thoughts on the potential of retirement crises due to the shortfall of retirement savings spurred in part by absurd growth expectations. Or maybe that’s more in in How Money Works’ wheelhouse. 😢

[@streettrialsandstuff]

That's true, and it's even scarier to think what happens if another conflict like Taiwan or war in Europe happens just before your planned retirement. But given the information available I don't think there's anything better you can do. Investing and hoping for the best is the only viable plan I can think of at this point.

[@Drmonstereater1]

@@streettrialsandstuff I agree at the individual level. No one person has much agency in this situation (unless your last name is Bezos, Musk, Gates, Buffet, etc.). My course of action doesn’t change. I don’t see a statistically viable path forward. That said, I don’t think setting the discussion aside is wise either. Either through collective political action (not advocating totally eschewing capitalism, but some major modifications might not hurt) or a grassroots movement (individual steps we can all to better our financial futures, outside of buying various ETFs) could help us hedge the tide in our favor.

[@afridgetoofar1818]

Nobody knows what the future holds for the stock market

[@abcnikhiltripathi]

Did you explain why the Sharpe ratio punishes downside volatility as well as "upside volatility".

[@BenFelixCSI]

I don’t talk about the Sharpe ratio at all here.

[@bad_writer]

What do you factor in to calculate the 4.62% real vs 7.24% nominal expected return? Is it just inflation, or any other things like managing fees, taxes, etc?

[@BenFelixCSI]

That is just the nominal return after inflation, but you can't use regular arithmetic. The real return = (1 + nominal return)/(1 + inflation).

[@vlf0lh41]

@@BenFelixCSI🤯Thanks! I had a feeling my math was wrong on this.

[@bad_writer]

@@BenFelixCSI Awesome, thanks Ben. Love your videos & advice!

[@tustak]

Even if longer time series in one way makes a more accurate estimation. Dont you think that there is too much different of both stock market (bias of certain companies) as well as global market. The last 20 years are more important than first 20 imo. Perhaps a differentiated weight of the total time series could be done to address this?

[@YankstaNZ]

I see a Ben Felix New Video, I click

[@notKhalid]

can you confirm that globally, at the end of the day, stocks(globally diversified) are the best cagr giving asset class, considering all others(obviously those too taking global diversification into account), if not, a video about it would be great!

[@BenFelixCSI]

That's a difficult question to answer. Stocks broadly speaking have higher expected returns than bonds, but certain types of stocks have higher expected returns than others. There are many other asset classes like venture capital which may have higher expected average returns than public stocks, but these returns are typically not attainable to most people.

[@TheFirstRealChewy]

Too much diversification will take you nowhere. The reason is that some assets will go up and some will go down, hence nullifying the gains and losses. It's like betting on every horse in the race. It won't do you any good. Invest in assets that you believe will hold or increase in value over time. Don't gamble.

[@NicolasBrouard09]

What is your reading list?

[@malcolmtheyeti2871]

Ya gotta admit he has nice hair. Do appreciate clear concise insights of the financial markets.

[@BenFelixCSI]

I have hair?!

[@SI-le6mf]

Thanks Ben, your videos are informative and amazing 🙏 Im curious, doesn't that mean investing in real estate is better than stock market especially Vancouver and Toronto real estate for us, Canadian?

[@BenFelixCSI]

I don't think so. Vancouver and Toronto have fairly low cap rates. BlackRock estimates lower expected returns for real estate than stocks, which is an assessment I agree with. www.blackrock.com/au/intermediaries/insights/blackrock-capital-markets-assumptions

[@MarkMcGrathCFP]

Also the TSX has beat the Vancouver and Toronto real estate markets on a price only basis over the last 25 years. It's the leverage that made historical real estate returns look amazing.

[@SI-le6mf]

​@@BenFelixCSIThanks Ben, this comparison is very interesting! When comparing real estate with stocks, do we include mortgage leverage, or do we compare them based on their inherent returns without considering financing?

[@kenwen7791]

​@@SI-le6mf btw he made a video touching this, you might want to check it

[@mere_cat]

I use a 5.5% real expected return in my planning calculations with a 50/50 US/Intl portfolio with 10% treasuries. Might still be a little rosy, but I also have a pension to fall back on.

[@TheFirstRealChewy]

Having a pension and eventually social security benefits will definitely give you a safety net.

[@og7952]

what is the expected return for your model portfolio currently ?

[@BenFelixCSI]

Slightly higher than for a market cap weighted portfolio. www.pwlcapital.com/wp-content/uploads/2024/01/20240202_PWL_Financial-Planning-Assumptions_Factor-Tilted-Portfolio.pdf

[@elephantandcastle838]

Greetings from UK. Valuations certainly matter. The UK market has been decimated by this being stuffed with old world companies even if they have lots of nonUk exposure. Interesting that MCSI USA Small cap value index contains 25% financial companies. MSCI All Country World Index is 25% technology companies. Think about your personal situation carefully before choosing your ETF mix

[@Ehhhh123]

Hi Ben, at the end of the video you state that the total market index fund expected nominal return is 7.08%. When you said total market index fund did you mean US stocks should return 7.08% or Global stocks (US and International) will return 7.08%? Thank you

[@BenFelixCSI]

That was for a globally diversified portfolio.

[@Ehhhh123]

thank you!@@BenFelixCSI

[@SigFigNewton]

@@BenFelixCSIglobally diversified? How does a dummy like me manage exchange rate risk

[@uplink-on-yt]

Nominal returns make it easy to compare relative to other rates, such as interest, does it not? While it's interesting to look at inflation-adjusted real returns, it only adds to the math you have to do without any other benefit. 10% nominal stock return compares easily to e.g. 3.3% savings accounts. Adjusting both figures for inflation doesn't provide much in terms of information, but just adds and extra level of anxiety (when you see the negative real return of savings accounts)

[@daysofend]

A question I've had for a long time is whether US stocks are themselves being pushed up because an endless influx of money via worldwide pension schemes. My British workplace pension is 70% US equities. There is nowhere else to put money in (from a layman's perspective) with remotely good returns to actually aim for a sustainable retirement. At breakeven investments, gilts or t bills, the average person will run out of money 10 years into retirement (napkin math). There is a whole generation whose retirement depends stocks returning 10%. Whoever figures out how this story ends will go down in history books.

[@managaniwth]

are we talking sp500 with or without dividends?

[@BenFelixCSI]

With dividends.

[@LiquidHydroxide]

Would you ever do a video comparing real estate returns against stock market returns (with equal amounts of leverage)?

[@TheFirstRealChewy]

Real estate returns tend to be more predictable. That's because you are the one setting the price.

[@LiquidHydroxide]

@@TheFirstRealChewy the price of what? You can “set” the price but the market determines if you sell it. Try to sell a house for double what it is worth and see what happens. Same goes for the rent you can charge.

[@RJGPG]

Just curious why Chuck Norris is giving investing advice!

[@tonyf7997]

For last 15 years our average returns are 14% across our portfolio (including dividends) - and the last 12 months on 26% real return.. So having just retired will be enjoying!

[@mk91-vz1oj]

What do you mean by "on average"

[@jayman4795]

Isn’t the nominal return still important though? An int’l investor holding the S&P 500 but living in a country with lower inflation than the US (say, Japan) would be closer to actually receiving the nominal return.

[@BenFelixCSI]

In that case we’d want to look at the real return in JPY. I think local currency real returns are all that really matter. In this video I’m talking about USD real returns.

[@donpeters9534]

Are you normalizing the 'Foreign Stock' returns to a common local currency?

[@cloudedjourney]

I think the US dollar standard gives the US a huge advantage. They are also built in away that strongly encourages entrepreneurship and innovation which leads to them being outliers globally. They also have a global Hegemony which allows them constant access to resources at good prices. That said this could all be waning.

[@BrianK-zz4fk]

basically a handful of stocks is holding up the entire market. Similar to 2008, when they slip free up some cash. As far as why US market is better 401ks, smart people will always take the match and props up the market since the inception.