how does the back trace work with your new 4% rate?
while the lines fit and things are nicely symmetrical, i have a feeling the reality wont be so pretty…
I don’t have any data prior to 1976, so +/- 16% based on people’s recollections is all I have.
Assuming a 4% growth rate trends back to about 58 K in 1965. This seems high.
You are right, the lines are pretty, but the reality is that prices swing wildly about these points.
By the way, if I fit all the data from 1976 to 2005 I get a 6.15% growth rate. If I use 1976 to 1998 I get a 5.5% growth rate. So, 4% annual growth underestimates the experience of the last 30 years.
Of course, these graphs are for illustrative purposes only. Consult your own financial advisor. Batteries not included.
I know that this time is different and we should ignore recent history (the last 30 years). We can blow holes in this based on one or more of the following:
a) The last 30 years have been an aberration. The period between 1890 and 1945 is much more relevant, after all that period includes what we will see in the near future (but in reverse) going from a petroleum-based economy back to buggy whips and farming.
b) Baby boomers are getting old and crusty and we have to support them in their old age.
c) Because Harry Dent says that the peak of the real estate boom will be in 2011 and the stock and real estate markets will crash after that with the next null being in 2026, based on a 46-year time lag of births in the US
d) Deflation, Japan-style.
e) peak oil
f) Aliens (the extraterrestrial ones, not the terrestrial ones) will descend on us and make us slaves.
g) Global cooling caused by the next bubble: Excessive purchase of carbon credits.
