Question

Considering the globalization of financial markets and how different our world is now compared to even 25 years ago. How useful can historical returns going back 50 to 80 years be to the investor as a predictor of future returns?

Answer 1

Historical return of not going to be that useful for protection of the future returns because there will be a tactical shift in the way stock will performed because stocks are generally not replicating their historical trend because the event are not historical in nature and the event are changing always so there will be a change in the reaction of the market as well so historical basis will not be providing with the adequate picture in respect to the return associated with various assets.

when we are considering the effect of the crisis as we can see in the case of 2020 coronavirus crisis which did not replicate any of the last financial crisis because the recovery has been very smooth and the pain was short lived so it can be said that the overall fundamental nature of Return will not change but the reaction of the market will always change as there will be a change in perspective of various individuals due to change in the technology and the change which will be visible after 8 years because there will be almost complete elimination of barriers in trade and other restrictive factors which will be completely promoting a very smooth Global world which will be providing exceptional rate of return and which will not be replicating the past performance.