How does hocus calculate future 20-year returns?

Rob's vision of "honest and informed debate" doesn't include answering simple and straightforward questions put to him. The unanswered questions cataloged here are an important part of Rob Bennett's Passion Saving, Hocomania.

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How does hocus calculate future 20-year returns?

Postby Schroeder » 05/05/06 at 21:03:01

If Morningstar had a forum "Simple Questions Rob Bennett Doesn't Answer", I would post this there. But since they don't, I'll give it an honored place here. :lol:

This particular unanswered question was first placed at this link:

http://www.s152957355.onlinehome.us/cgi ... 1146757288

From Diehards conversation 50091 M* Link

26. What History Tells Us
hocus| 05-04-06 | 09:24 AM
Stocks may actully return 10% over the next 20 years or they may just as likely return 4%.

I think it helps to put numbers to these things and to speak in terms of real returns.

Starting from today's valuations, the most likely 20-year return for the S&P is 2.6 percent (this is a real, annualized return). The lowest possible return (only a 5 percent chance, according to the historical data) is a negative 1.4 percent. The highest possible return (again, only a 5 percent chance, according to the historical data) is 6.6 percent.

Rob

This Diehard challenges hocus . . .

27. Hocus #26
YARIE| 05-04-06 | 09:54 AM
Starting from today's valuations, the most likely 20-year return for the S&P is 2.6 percent (this is a real, annualized return). The lowest possible return (only a 5 percent chance, according to the historical data) is a negative 1.4 percent. The highest possible return (again, only a 5 percent chance, according to the historical data) is 6.6 percent.

Come on! Don't pretend that you have some formula that gives these exact "5%" probabilities for predicting future returns up to one decimal digit (2.6%, not 2.5% of course... and then 6.6% and not 6.7% an so on...). This is so ridiculous! Do you know how many things can happen in the coming 20 years, making all these calculations worthless??

<snip>


And hocus replies . . .

28. Slightly More Likely
hocus| 05-04-06 | 10:06 AM
2.6%, not 2.5% of course... and then 6.6% and not 6.7% an so on...

2.6 is slightly more likely than 2.5 percent, according to the historical data. Time will of course tell the tale as to which number actually pops up.

Rob

To which YAIRE asks . . .

29. Rob - #28
YARIE| 05-04-06 | 10:10 AM
Can you please elaborate more on your calculation of the expected 20 years return?

Thanks,
Yarie

Yarie is still waiting for an answer from hocus . . .

33. Rob - indeed there is no formula?
YARIE| 05-05-06 | 08:59 AM
Since you haven't responded regarding explaining your calculations is #26, people might suspect that no serious formula is involved or that the formula cannot resist the readers scrutiny. I would like to be proved wrong...
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Re: How does hocus calculate future 20-year return

Postby ataloss » 05/09/06 at 05:57:20

small set back but I think h is gaining momentum at m*
Rob, please get help: Loudoun County Mental Health 703-771-5100  I am not a mental health professional. I am not qualified to diagnose or treat. Get help. What do you have to lose? Your current course is catastrophically unproductive.
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