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Will the Russell 2000 go up?

Q: Will The Russell 2000 go up?

A: Yes

Q. But will it go up over the next 5 years? Is my money safe there?


A: Yes. (I’m 89.0% sure of my answer, using to calculate 5 years of investment with a lump sum of $100,000, and a withdraw of that $100,000 at the end so I could get the nice number rather than staring at the lines and seeing how many went down. The average line more than doubled. Their data goes back to 1927, and I am using U.S. Small caps as a proxy for the Russell 2000. Inflation adjustment was turned off to make the numbers clearer, except where stated otherwise, and I assume 0.5% per year management expenses).

Q: But five years is a really long time! Will it go up next year?

A: You ask such hard questions! I’m 2/3 confident that it will go up next year (well actually 67.5% sure, with an average profit of 18.9%).


Anyway, your question is kinda odd, because you probably are investing for more than one year.  If you put inflation (at the CPI) back in, and give yourself a 10 year horizon, you still come out ahead 91.2% of the time, with an average gain of 168%.

Q: Would I be safer in the S&P 500?

A: No.

Henry Crutcher is an avid family guy, board gamer (think Settlers of Catan, Puerto Rico, etc), computer nut, and all around geek. Hailing from Louisville, KY, he has noticed that the weather in Louisville is remarkably similar to the weather in Atlanta, GA despite the 407 miles that separate them. He has two daughters, one cat, and lots of trees. He loves the Miles Vorkosigan series from Lois McMaster Bujold, for its mix of SF, comedy and insight into how people work. He also comsumes more than his fair share of cheesy business/economics books, such as The Ascent of Money by Niall Ferguson, or Farewell to Alms, by Gregory Clark.

1 Comment

  1. […] I'm 89.0% sure the Russell 2000 will go up […]

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