tag:blogger.com,1999:blog-7905515.post4407286514076612323..comments2024-03-14T11:09:32.759-05:00Comments on Falkenblog: Limits to GrowthEric Falkensteinhttp://www.blogger.com/profile/07243687157322033496noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-7905515.post-50657631060601237552011-05-04T19:26:35.903-05:002011-05-04T19:26:35.903-05:00Your guess about growth rates is as good as any. T...Your guess about growth rates is as good as any. There is no answer that makes sense.<br /><br />If you are an optimist, go with a high growth rate. If you are a pessimist, go with a low growth rate. Both estimates will most likely be too high.<br /><br />The total market cap of the global stock and bond markets today is about $100 trillion (rounded up)<br /><br />If one your ancestors had invested $1 in 1 AD at a nominal rate of 1.62% per annum, that $1 would now be worth $100 trillion.<br /><br />That is what $1 would be worth today if it were actually possible to compound, long-term<br /><br />What risk premium stories seem to miss, as well as growth rate stories, is that over time it is really hard to hold on to assets.<br /><br />Ultimately if you have a lot of assets someone takes it away.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-63100781339354684012011-05-03T07:43:43.472-05:002011-05-03T07:43:43.472-05:00If you're going to compare the purported "...If you're going to compare the purported "real equity growth rate" to the "equity risk estimate" (and "real returns" and "top-line return")I think you should explicitly note their definitions. <br /><br />Also, with an increased share of S&P500 (amongst other indices) profits coming from outside the U.S., the comparison of corporate profits to U.S. GDP might not be expected to be stable over time.Brent Bucknerhttps://www.blogger.com/profile/14754659334435107746noreply@blogger.comtag:blogger.com,1999:blog-7905515.post-19326547330525894372011-05-03T03:54:26.235-05:002011-05-03T03:54:26.235-05:00That corp profits graph looks a lot closer to 7% o...That corp profits graph looks a lot closer to 7% of GDP than 10%.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-11707615148422575512011-05-03T00:42:56.259-05:002011-05-03T00:42:56.259-05:00I agree that post WW2 is not representative. But ...I agree that post WW2 is not representative. But real returns in that period were well above 5.5%. If real returns on stocks going forward are 5%, that will already represent a large drop.<br /><br />Why do you think returns will fall all the way to 3%? Dividend yields alone are around 2%. Do you really think long run dividend-per-share growth will be as low as 1%, even with share repurchases and GDP growth? I don't see it...please explain.edhttps://www.blogger.com/profile/01150091053740909530noreply@blogger.com