Comments on: Can Historical Stock Market Returns Predict Future Returns?

By: Zach @ Four Pillar Freedom

Zach @ Four Pillar Freedom — Tue, 03 Apr 2018 12:56:00 +0000

In reply to Mr. Tako.

It’s amazing how many people, even “experts” think they’re capable of predicting how the market will perform during any given year. This analysis just proves that it’s impossible to predict market returns using historical returns. There’s too much randomness. Thanks for the feedback, Mr. Tako 🙂

By: Zach @ Four Pillar Freedom

Zach @ Four Pillar Freedom — Tue, 03 Apr 2018 12:54:46 +0000

In reply to Lily | The Frugal Gene. Haha they actually should, though. These plots look like randomly-generated data points for the most part.

By: Zach @ Four Pillar Freedom

Zach @ Four Pillar Freedom — Tue, 03 Apr 2018 12:53:31 +0000

In reply to Retire Before Dad. Yeah, I wasn't terribly surprised at the results myself but it was good to run the numbers just to assure myself. It just proves how unpredictable the market actually is in any given year.

By: Mr. Tako

Mr. Tako — Mon, 02 Apr 2018 16:19:51 +0000

Pretty much exactly what I predicted when I read the post title. Annual stock market returns are like rolling dice — what happened in previous years has no bearing on the current year.

Yet, people still believe that past performance is a predictor of future results. They look at past S&P performance and expect to get a similar result. The 4% rule is yet another good example. *sigh*

Oh well! Thanks for the nice analysis FPF!

By: Lily | The Frugal Gene

Lily | The Frugal Gene — Mon, 02 Apr 2018 16:10:20 +0000

In stats class, when they’re explaining what random scatter plots are…they should just show that!

By: Retire Before Dad

Retire Before Dad — Mon, 02 Apr 2018 13:13:20 +0000

Interesting analysis and not-so surprising result. Thanks for sharing the spreadsheet.