Originally Posted by
SailorRob
My point is that you don't judge the future by what has happened in the past when it has happened through 40 years of declining rates and multiple expansion.
I'm not saying anything will go down, just saying that the prices on non productive assets cannot compound at a greater rate than the economy for long periods of time.
Yes nobody can know the when or the how long but we can say that taking an average over the last 40 to 50 years and assuming this will be roughly correct going forward will be wrong.
Unless people can constantly borrow more and more against their incomes forever then then at some point we will be constrained by income growth, which is economic growth, which in NZ per capita is ZERO.
If we're lucky we'll do 1.5%.
History says the exact opposite, it says that over time its a Goose egg (see Shillers irrational exuberance for the data or look at European prices over 4 to 500 years).
When you say history, what you mean is NZ and 40 years, that is not history!
It has to be a Goose egg for obvious reasons.