Stock Market Returns Are Anything but Average

Re:Stock Market Returns Are Anything but Average by paulpauper on Friday April 30, 2021 @12:04PM (#26995228)

>f something grows consistently with low variance over a long period of time

but that is what compounded interest is, no?

But I agree that this why market timing does not work, at least not for the vast majority of ppl and funds. If you miss those good days, you are screwed.

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Re:Stock Market Returns Are Anything but Average by kqr on Friday April 30, 2021 @01:22PM (#26996406)

Yes, and you can expect relatively steady compounding returns at the risk-free rate (the clue is in the name.)

When you see return rates higher than the risk-free rates that still seem like they exhibit low variance, then one of two things are true:

1. Either you have found something that produces way too much reward for its level of risk. This is for anything publicly traded somewhat unlikely.

2. Or you have found something that's prone to rare, but incredibly big swings. The fatter the tails, the more likely it is you'll get a long, good run followed by something that completely wipes you out.

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