S&P 500 short. A present for the holidays

So no one actually knows this. It's a big mystery as to how much money did stock investors actually make. If no one knows how much money stocks have actually returned, why do people think that it's actually given investors back something positive? There's a lot of false academic teachings out there.

Asset pricing is based on facts. First set of facts: the total return on the stock market versus bond market. Fact one: stock paid a lot more than bonds. He portrays this as a return to stocks, but this is actually the graph for the S&P 500 data.

So here's the problem with the S&P 500. Most people don't realize this. The S&P 500, of course, is based on 500 stocks. But think about this: some of the stocks on the S&P 500 today are Apple, Google. Those companies were not around back in 1928, and there are certainly a lot of companies that were around back in 1950 that aren't around now.

So what happened to all the losers? You're asking like, what if a company that was on the S&P 500 went out of business in 1960, 1970, in 1950, whatever, right? Well, the answer is they just ignore it. As an old company went out of business, they say, well, let's just replace it with a new one.

This is actually not the return for any basket of 500 stocks. It's not the return for the whole stocks, nor is it return for the 500 stocks on SP on any given period. It's actually based on about 500 best stocks in the stock market. And the thousands, we're not even talking about thousands, maybe tens of thousands or hundreds of thousands of stocks got delisted from the market over the past nine, eight years. Yeah, they're just not in this calculation.

So you can immediately understand why this is total BS, right? It's based on survivorship bias. It doesn't represent the market as a whole. And Mister Cochran, here in one of the earlier finance classes that he's teaching at the very nascent level, is going around telling people this as a fact.

Bottom line is this: no one knows how much money people have actually made in the stock market. This is actually a very highly debated subject, even amongst finance academics who actually do real research. If you hear somebody say the stock market has returned 8% per year, blah blah blah, some number-wise, they're full of it. They don't know what they're talking about. They've been listening to many AHS loss. They've been listening to many Cochran.

So now you know the truth. Now you can go out there and destroy the lives of many finance professionals and professors. Happy hunting!