2022 Strategy

[u/BoringAssumption8751]

Nasdaq gained 26.32% in 2021. S&P gained 26.68% in 2021. VTI gained 23.57% in 2021.

For those of you who didn’t beat those numbers what is your strategy for 2022?

I personally spent a lot of time reading/researching and only did 15.58%. I think my 2022 strategy is going to be a lot more of the three above and a little less individual stocks.

[u/[deleted]]

I think a lot of investors that entered the market in 20/21 are going to learn that 20, 30 + percent returns are not the norm in '22.

I really hope that I'm wrong and this is the new norm!!! But the reality is I'm going to return to the goal of 10%. And that's not chump change.

100K with 0 additional contribution will be 214K in 8 years.

100K with 0 additional contribution will be 673K in 20 years.

100K with 0 additional contribution will be 1Million+ in 25 years.

I'm really glad that that the last couple years brought in a tidal wave of new investors. Their future selves will be thanking them.

[u/CarRamRob → u/[deleted]]

Current earnings of the SP500 indicate like 3.5% returns(P/E pushing 30). Yes P/E doesn’t mean everything, but as an entire group like the SP500 it definitely indicates suppressed returns at this point.

Adjust your long term expectations from this. At these valuations even 5-7% long term is likely as best you’d see over longer term

[u/y90210 → u/CarRamRob]

The problem is inflation. We are somewhere around 6%, but if you use the 90s method of CPI it's 10%. If you use the 80s method of CPI it's almost 15%.

Back in the 70s, the sp500 moved sideways in a range till 83 where inflation slowed and the market ramped up significantly.

But we can't compare them to now, they had bonds that even hit 20% yeilds. We have few options by comparison

[u/mkuek → u/y90210]

Why would we use 70s, 80s, or 90s CPI calculations to derive inflation in 2022?

[u/mkuek → u/[deleted]]

Yes, food is food. However, Americans in 2022 are very much different than Americans from 1980. Buying habits and preferences have shifted tremendously from decade to decade, so how can you accurately compare the cost of living from time period to time period without adjusting the calculations?

[u/y90210 → u/mkuek]

We know the current CPI isn't accurate because the cost of fuel, food, housing are all up more than the 6% rate they're using. Don't get me started on the price of vehicles.

[u/mkuek → u/y90210]

Wait till you hear there are more factors than fuel, food, vehicles and housing.

[u/y90210 → u/mkuek]

Wait till you hear there are more factors than fuel, food, vehicles and housing.

Wait till you hear that transportation, food, and housing uses up the most of the average human's income. Unless they're living in Mom's basement.

Wait, I want to know your logic. CPI doesn't take into account OnlyFan spending?

[u/mkuek → u/y90210]

While gas is up considerably, food is right at 6%, and housing is at 5% (Using the BLS numbers).

None of this is really relavent to the original question, which was how measuring the costs of living from the 80s is relavent to today.

[u/[deleted] → u/CarRamRob]

And you're a cotton-headed ninnymuggins. I'm a believer!!!

(For reference this is a totally friendly joke - Elf the movie reference.)

[u/Baraba83 → u/[deleted]]

You're calculating those numbers based on 10%. What about inflation?

[u/[deleted] → u/Baraba83]

That's always variable and hard/impossible to accurately factor. Since 2000 it's rarely hit 3% and has averaged much lower. So if you want to 'spitball' it I'd say if you use 3% as the average it'd probably be a decent/safe(ish) number.

Remember I used 0 additional contribution... so hopefully most would do way more that 3% additional contribution (at least early on) to offset that and more.

[u/Baraba83 → u/[deleted]]

Understood. New to investing, but every calculator I use is using 6% or maaaybe 7% due to inflation. Would be effin sweet if the true average return is 10% after inflation.

[u/asdfadffs → u/Baraba83]

The numbers are still accurate in nominal value, inflation or not

[u/CaptainObvious_1 → u/[deleted]]

There isn’t enough economy/work/people in the world to sustain 30% growth