I am sure this question has been asked a hundred of times before. But, honestly, would still love to hear everyone thoughts on this now in February 2021!
@geeki The answer is equal weighted sp500.. if you’re only buying NDQ from today you will be in for a rough ride - most notably with the rising AUD currency and rising bond yields putting pressure on tech valuations..
@geeki SP500. I'm a long term investor who make decisions based on fundamentals. SP500 will likely have very poor 10 year return based on discount rate, but there's a good chance NASDAQ will actually lose value over a 10 year period.
@praywithfaith I'm talking about 2021 to 2031 not the past 10 years. Long term relationship between discount rates and stock market is well documented.
@praywithfaith Based on current valuations the expected return over the next decade is likely to be between negative 2 and negative 4 per cent per year.
@coglig I think the forecast is a bit better than what he's saying, probably 2-3% annual nominal returns on SP500. However you should be able to get 7% on Australian and emerging markets. Property will do well as well.
@rettatzkie It is not so much a forecast as mathematics. Currently using many different metrics the U.S. market is overvalued. There are a few possibilities for its correction. 1) The market has miserable returns until valuations finally reach fundamentals; this is the 2-3% for a decade possibility. 2) A major crash that brings valuations down to earth so they can grow at traditional rates from there.
Option 1 could come about more quickly than a decade or so via high inflation.
@ngoinhatd I didn’t mean to be overtly rude, I just think it’s unfair that almost everyone recommends Vanguard without substantiating the claim. Thanks for your response.
@geeki Usually just use them for average market performance checks, since I have tech and non tech stuff. That being said, I also check sector specific ETF for example resources. The problem I think today is things like APPL and TSLA in both will have big impact on how both moves in a positively correlated manner and resulting their market indicator job overlapping. Like if TSLA crashes as Michael Burry expected later, Nasdaq will be very very red, so as S&P 500. That might ripple into a stop limit sell for many computers set in dark boxes. And we all suffer a little. Fun things I saw from the recent release: Bill Gates foundation reduced their holdings in big techs by 50%, and the wait-and-see “insurance” company Warren reduced APPL... the recent 2 red days, triggered or might be contributed by followers of those sells. And interestingly my VZ has been green ever since Warren’s holding was released....
@geeki Since 1972 NDQ has outperformed the S&P 500 by about 30 basis points before fees. In Australia NDQ MER is 0.48% and IVV is 0.04%, so in real terms the S&P 500 might be expected to outperform over the long term and have about half the volatility.
