No. of Recommendations: 1
I think the salient question is something more like this: what percentage of five year rolling periods did the S&P 500 and cap weighted predecessors beat rolling T-bills, averaged across only those starting dates that the median firm was trading above (say) two times trailing sales as is currently the case?
Mr Bayes should not be ignored. If the starting situation is not historically typical, there is no good reason to expect the historically typical outcome.
That only addresses half the equation. The trend is for the USD to be an increasingly poor store of value. Look at its value over the last five years compared to other assets like gold, real estate and stock.
As an example, imagine that your portfolio is half gold and half USD. Over the last five years gold has gone up 50%. Therefore, combined, your portfolio has gone up 25% in value. Everybody agree? Well, I say your portfolio has gone DOWN 25% in value. You still have the same amount of gold and the USD has gone down 50%. The gold was the proper benchmark, not the USD.
The S&P 500 may be expensive (I don't even look at that stuff, I buy individual assets) but it looks better than T-Bills to me over the next five years.
