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When a 59% Annual Return Just Isn’t Enough - Jason Zweig

edited July 2021 in Other Investing
“Optimism is as American as hot dogs and apple pie. Too much optimism, though, is about as good for you as eating a few dozen hot dogs and slices of pie. In a recent survey of 750 U.S. individual investors, Natixis Investment Managers found these people expect to earn 17.3% this year, after inflation. That might not sound like pie in the sky. The S&P 500 returned 18.4% last year, counting dividends, and is up 15.9% so far in 2021. Recent past returns always mold future expectations.

“Over the long run, however, the people in the Natixis survey anticipate earning an average of 17.5% annually, after inflation—even higher than for this year. That’s up from the 10.9% long-term return they expected in 2019, the previous round of the survey. It’s also more than twice the return on U.S. stocks since 1926, which has averaged 7.1% annually after inflation. It’s more than triple their 5.3% return over the same period after both inflation and taxes, according to Morningstar … The biggest winner of all over the 10 years through the end of May was Tesla Inc., up an average of 59.1% annually …”

Full story appears in The Wall Street Journal July 3, 2021


  • Oh man do I need to ratchet up my expectations.
  • edited July 2021
    Got curious and found a report by Natixis about the survey. The optimism is global:
    US investors may have the highest long-term return expectations at 17.5%, but the 161% gap with the professionals’ call for returns of 6.7% looks better than what’s expected in other countries. The 157% gap in France looks considerably smaller as well (12.1% vs. 4.7%2).

    It may be surprising to say the countries where the lowest gaps are found are those where investor expectations were still more than double what advisors say is realistic. This includes 118% in Germany (10.7% vs. 4.9%2) and 120% in Canada (11.2% vs 5.1%2).
  • edited July 2021
    Thanks @davfor for the added information.

    (@Mark’s just being modest.)

    AFAIK I’m the only regular who occasionally mentions the tracking fund (PRSIX) I use to gage my performance. So people can read whatever they want into that …
  • JZ was interviewed on Wealthtrack recently:

  • edited July 2021
    Thanks @bee

    You reminded me to link this week’s Wall Street Week from Bloomberg. I’ve really grown to appreciate this one-hour show. When it first aired a couple years ago I didn’t think it was very good. Don’t know if it’s really better now or if maybe my expectations now are less. Somewhat unfortunately, I think, they named this one after the old Rukeyser show. Comparisons are inevitable and nothing, including this one, compare well against that classic.

    Larry Summers may be bright, but his appraisal of markets late in the show makes about as much sense as I do after 6 drinks. I’m going to have to listen again to see if I can discern what he’s saying. Might be something really profound.:)
  • Zweig must be referring to clients of Dave Ramsey, Theocratic Financial Conman, who tells his listeners to just "pick good growth stock funds returning 12% annually." Of course,listeners can't research these funds themselves- no they have to go to a local ELP(Endorsed Local Provider), for their financial adviser, who DR is only too eager to recommend !
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