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Comment by bryanlarsen | Hacker News Reader

If you bought 100 dot-coms in 1999 and 99 went to zero but the other was AMZN, you would have doubled your money.

IF you'd bought an S&P 500 tracker, you would have more than quadrupled your money.

And if AMZN was one of ten you would have 20X'd. It's just an extreme example illustrating the principle. Most people don't have 99x as many losers as winners, most winners aren't AMZN, and most losers don't go all the way to zero.

If you're buying dot-coms in 1999, you absolutely have 99x as many losers as winners.

And if you pick any year other than 1999, there are a lot fewer losers. I picked 1999 because it was the worst, not because it was the best.

it took 14 years for s&p 500 to break even if you bought it in 2000

> it took 14 years for s&p 500 to break even if you bought it in 2000

Not if you had a modicum of bonds and rebalanced:

* https://www.forbes.com/sites/advisor/2010/09/13/its-not-real...

Or if you had international stocks.

This myopia of many Americans to only look at the S&P 500… words fail me. Sheesh. Try some diversification (peer-reviewed citations in description):

* https://www.youtube.com/watch?v=1FXuMs6YRCY

Buying S&P 500 trackers is considered diversification though, since... 500 companies instead of one or two. "Sheesh".

> Buying S&P 500 trackers is considered diversification though, since... 500 companies instead of one or two. "Sheesh".

Except all your assets are in in one asset class (equities) in one country (US). Ask the folks in Japan who were around in 1989 how that can work out.

Yeah, few people realize what it means to sit on a paper loss for 14 years. Not many have the mental fortitude to do that. But it's really hard to convince the millennials and younger who experienced nothing other than a roaring bull market throughout their investing lifetimes.

> the millennials and younger who experienced nothing other than a roaring bull market throughout their investing lifetimes

Poking at certain generations tends to be counter productive, but this jab is also disconnected from reality.

Millennials entered adulthood in the shadow of the mortgage crisis, which by all measures was a depression event until the definition of a depression was reworked.

There were only two significant crashes between 1929 and 2008. 1987 (black monday) and the tech bubble (2000).

More recently, covid was a ~40% decline in the S&P (bigger than black monday), and another ~30% started at the beginning of 2022.

It shouldn't be worn as a badge of honor, but millennials and younger have experienced more volatility in a much shorter amount of time than older generations.

> few people realize what it means to sit on a paper loss for 14 years. Not many have the mental fortitude to do that.

Partly why real estate is such a big part of most people's net worths (and covered by the OP): it's not marked to market frequently, so it's much easier to hold for decades at a time. If everyone had a ticker they looked at every day where the value of their house was updated real-time, there would be a lot more panic selling.

And how did a portfolio of randomly selected dot-coms of that vintage do in comparison?

Doubling your money over 25 years is roughly ~2% returns a year, so it would have been a terrible investment. For comparison, if you parked your money in the S&P 500, you would have made over 5% a year.

A terrible investment, for sure, but not as terrible as you would expect if you were told there were 99 times as many losers as winners in the portfolio.

If you bought gold in 1999 and kept it until today you would have 8x'd your money.

1999, or any other year is arbitrary, and you probably can pick dates to make any investment strategy look good:

* https://www.longtermtrends.net/stocks-vs-gold-comparison/

In the following graph:

* https://www.macrotrends.net/2608/gold-price-vs-stock-market-...

we have:

* over 5 years, gold over DJIA

* 10 years, DJIA over gold

* 20 years, gold

* 30 years, DJIA

> 1999, or any other year is arbitrary, and you probably can pick dates to make any investment strategy look good

I agree, that was partly my point!

> you probably can pick dates to make any investment strategy look good

But buying internet stocks in 1999 is the worst year. What happens if you buy gold in 1979?

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