Remembering a Simpler Time
Source: Callan Associates and the Wall Street Journal
It was a simpler time. Before the Credit Crisis of 2008 and the Great Recession that followed, US Real GDP growth was trending north of 3% and interest rates on US government debt were north of 4%. In other words, things were normal.
Post-crisis, things have been anything but normal as emergency monetary policies have brought rates to near zero (or below internationally) in an attempt to jump start sub-par GDP growth.
For investors to achieve the same 7.5% return as in 1995, they are now forced to accept almost 3 times the volatility.
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