Thanks for sharing that. A couple of questions...
By "inflation adjusted growth rate" you mean, real rate of return, correct? If so, shouldn't that number be something around 4.5% instead of 8.45%?
Your post is similar to Ryan's Melvey's "What's My Benchmark" article here:
http://www.stableinvesting.com/2011/04/ ... hmark.html
Also, I really think we need a quick performance link on the home page of this forum so that we all know what we are talking about when we get into the debate about whether or not the PP's current performance is tracking its historical performance. I get frustrated when I read most 'tracking error' posts because the PP is not supposed
to track some other index like the S&P 500 or a 60/40 Bogleheads setup. We should only be comparing it to itself. Only then can we have reasonable discussions about whether or not it is lagging, broken, outperforming, regressing to the mean, etc.
Barrett my apologies for the late reply. I've been enjoying San Diego - and fatty red meat and red wine
Your comment made good sense - and so I went through my spreadsheet today, brought it up to date (as of Friday's close) and tried to find some errors. I didn't find any, but that wouldn't be the first time that I missed something obvious...
It's only about 10 years of data - so far from enough information to make any long term evaluations.
Yes - When I say "inflation adjusted returns" I really mean "real returns". From what I can tell, the last 10 years have been better than average for the HBPP. Closer to 8 to 9 percent real instead of 4 to 5%. That should be a good indicator that you can't rely too much on any 10 year model...
So... here's what I have in my spreadsheet. From March 26, 2004 to June 5 2015:
The black line is nominal returns (9.58% CAGR over this period)
The blue/purple line, just below it is the inflation adjusted return. (7.32% over this period)
The vertical lines are rebalance points (15/35)
Here's the logarithmic chart of just the real (inflation adjusted) returns.
The "best fit" line to these returns is 8.43%. Note that that the best fit line is a bit higher than actual.
Again, don't get your head too caught up in just the last 10 years. All this tells me is that the HBPP doesn't appear to be currently broken, and that the last 10 years have been better than average.
AND... Please don't believe these charts on face value. I've been known to make plenty of clerical errors in the past. If your data disagrees, I would very much like to know.
To Reub's point - I don't have a chart for the next 10 years. As soon as I figure out how to do that, I'll let you guys know right away.