Big Investers confuse RoR, Fed rate and Inflation.
An investment paying 6% within 9% inflation is bad.
An investment paying a lessor 2% in 1% inflation is good.
The best investment environment is lower taxes and less regulation. However on top is the rigging factor.
Many investors benefitted in the Obama years, but homeless camps sprung up so it could not last forever, because soon you too could be homeless.
That was the rigging factor. The Fed’s propped up the market, at a cost of ever increasing homelessness.
Many Big Investors vote Never Trump because they vote for no change. They should be voting for sound economics instead.
Let's suppose you have $100 million to invest and you have an option to either buy long-term U.S. Treasury bonds or S&P 500 stocks. Let's suppose the inflation rate is 2% -- matching the long-term FED target.
If you buy $10 million in U.S. Treasury bonds that pay even a high (compared to recent years) return of 5%, you have a gross return of $500,000 but your actual return is much smaller.
1. You immediately lose $200,000 to inflation. Your $10 million is only worth $9.8 million after one year.
2. If you're investing $10 million you are likely in the highest tax bracket, so you're paying an income tax rate of 37%. So you lose $185,000 just in Federal income taxes (we'll ignore any state tax implications here).
So your $10 million earned you a net of $115,000 ... a 1.15% return even though you invested in a "safe" investment with a nominal return of 5%.
If you invest in an S&P 500 index, you'll earn an average 2% dividend return over the long term ... and over the same long term you'll see an average appreciation of at least 8% in the value of the stocks. Let's assume these are your returns for the first year.
1. Your $10 million earns $200,000 in dividends. It sees an $800,000 increase in value.
2. Your dividend is subject to a special tax rate of 20%, so you pay only $40,000 in income taxes on the $200,000 in dividends.
3. If you sell the asset after one year, you pay a capital gains tax of only 20% on the $800,000 gain. So that's another $160,000 in taxes.
Add these up and you get an 8% return on this investment.
Go through these numbers again and ask yourself why anyone who is in a position to invest $10 million with some risk exposure would ever buy the U.S. Treasury bonds -- even at a high rate of 5%.