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Comment by SEJeff | Hacker News Reader

Actually the markets are "supposed" to double every 10 years, which is said that on average over 10 years, the markets will grow 10% per year. Since the recession 8 years ago that has been much lower, but in general, that is the rule most industry people will give you. I work as a tech guy in finance and have for the past 8.5ish years.

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The U.S. markets reflect the U.S. ascending to become the dominant world power over the course of a century. Naturally, the markets grew during this period of tremendous economic growth. The investment industry likes to extrapolate from this, and declare it a rule of the markets as if it's a law of physics.

If growth slows or stalls, eventually the markets will catch up. A market that grows independently of the underlying economy doesn't make sense in the long term.

For something to double in 10 years it only has to grow by 6.9% per year. This is from a somewhat unusual application of The Rule of 69. Latter is way of determining doubling time of something that grows by x%: just divide 69 by x and that will be the doubling time in periods.

So if the DB grows by 10% weekly, then it will double in 6.9 weeks. If the interest rate is 3% then the debt will double in years, etc.

The Rule of 69 is good for a approximation, that works well with low single digit increases.

Anyone who tells you to expect a 10% annual return from the S&P500 is lying to you. And probably trying to sell you something.

Really, I do not understand your reasoning since the S&P 500 has an annualized return of >10% since 1970.

https://en.wikipedia.org/wiki/S%26P_500_Index#Annual_returns

Just because the S&P has seen such returns over the last 40 years, doesn't mean you'll see those returns over the next 40 years. The US economy is aging out, has stagnant wages, etc.

Also we saw a huge drop in interest rates that won't happen again over the next 40 years.

Going to disagree with you here. I think it'll be impossible to raise interest rates much further without causing economic damage. See negative interest rate policies in Japan and Europe, and close to zero rates still in the US.

I 100% agree with you about the difficulty of raising rates. But I don't think they'll continue to drop like they have over the past 30 years.

I have a hard time imagining a world of -5% to -10% rates!

> I have a hard time imagining a world of -5% to -10% rates!

A year ago I would've agreed with you, but with the ECB at -.04 and Japan at -0.02, I believe it more likely than previously.

Heh, fair enough. It's certainly very surprising to see rates below zero. So, indeed, I am much less certain about the future!

Incorrect, please re-read my statement. An average 10% annual return over 10 years. As the other reply to this notes, history shows in general this rule has held since 1970ish.

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