Sunday, March 29, 2015

Immortal Investor Idiot Only Earned 8.7% Annual Return!

March 27, 2015
First U.S. penny sold for $1.2 million

The first U.S. penny is 223 years old, and is also worth a lot more than one cent.

That's only an 8.7% average annual return.

($1,200,000 / $0.01)^(1 / 223) = 1.087

What a f#%^ing idiot! As we all know, the stock market generates 10% returns for all eternity. Always has, always will. Should have made $17 million off that penny!

$0.01 x 1.1^223 = $17.0 million

Don't make the same mistake. Invest your penny in the stock market today and lock in your guaranteed path to long-term prosperity!*

* Past performance not necessarily indicative of future results. Your penny's performance may vary. Risk of substantial loss. Contact your financial penny advisor for penny wealth management ideas and options.

In all seriousness, ever get the feeling that some things are just too good to be true? Over an eternity, that's how I feel about 10% stock market returns. Go figure.

This is not investment advice.


Troy said...

CBO is projecting a $40T (2014 dollars) economy by 2050, but that's only a 4% nominal growth rate from here.

that $4T jump since 2009 is impressive though.

shows how growth is sub-5%, and that's OK. I'd rather have sub-5% with no cyclical crash than the +5% growth bursts of the respective Clinton and then Bush booms.

'course, with sub-5% growth, the underfunded state pension plans get interesting.

Stagflationary Mark said...


The business cycle is not dead. Slow growth *and* cyclical crashes could easily be the norm from here. Sigh.

Troy said...

Slow growth *and* cyclical crashes

(real per-capita annual net consumer borrowing) shows how 2003-2008 was an excursion well out of the postwar norm

changes this to real total per-capita consumer debt, showing how debt it rather elevated and we don't have a lot of top-side leeway to play with, especially if ZIRP turns to PIRP and not NIRP for exogenous reasons.

Speaking of which,

adds real per-capita treasury debt (less Fed holdings) in red

Stagflationary Mark said...


If the economy is like a 747, then we're flying with a missing engine or two.

It won't take much to hit stall speed if things don't go perfectly from here.

One of my bigger concerns is what happens to growth when the unemployment rate bottoms out. Unlike real interest rates, it cannot go negative.

There is a hard floor at 0%, not that we'll get all that close to it. I certainly do not expect to see a 1% unemployment rate, or even 2% for that matter. So where does it bottom? Nobody knows, but it's coming.

Troy said...

"Then the unemployment rate bottoms out. Unlike real interest rates, it cannot go negative."

The UNRATE is deceptive. I prefer looking at FTE:

compares FTE to age 25-64 population, showing we're still years from 2006-level employment and another decade away from 1999

Stagflationary Mark said...


The college graduate unemployment rate can't fall all that much further, and one would think growth will slow when it can't.