One has to do the mental math: nominal return minus inflation is real return.
This is why I prefer to show expected market returns on an inflation-adjusted (real return) forecasts as well as nominal return expectations.
This risk-averse habit is a legacy of the post-bubble deflation years, when the zero nominal return on cash looked pretty good compared with the alternatives.
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For example, Mr Reid calculates that the likely nominal return from American equities over the next 10 years will be 10.6%, more than a percentage point above the historical average.
Note that the real return since 1926 is almost 1% per year higher, a fairly material difference in terms of returns, and yet the nominal return was almost identical (9.9% annually since 1926 versus only a slightly lower 9.7% since 1957).
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Likewise, there was a nearly 27 year period where gold produced a negative nominal compound return and a significantly negative real return.
Also, in the one 5% plus inflation surge that was in this data set, the CRB index produced a nominal compound return of 1.58% and a real return of minus 3.32%.
What I do know is that for the limited data set I have, the CRB index produced a nominal compound return of 0.77%, a real return of minus 2.16%, a standard deviation that is twice that of Treasuries, had a twelve month period with a loss of 48.74% and had a 27 year period with a negative compound return.
Deflation pushes up the real burden of debt, while the value of assets linked to that debt, such as house prices, may have to fall even more sharply in nominal terms to return to a fair level.
It is important to note that the nominal yield does not estimate return accurately unless the current bond price is the same as its par value.
The nominal rates posted on the federal return are going down, but Congress is ceding less of the revenue to the states by reducing the credit that the executor can claim for state taxes paid.
You get a 1.6% real return, which becomes a nominal 6.6%, which translates into 4% after tax, which in turn becomes a negative 1% after inflation.
Therefore, nominal yield is used only for calculating other measures of return.
Some restaurants, like the Ning Po Residents Association, require a nominal annual fee (around 200 Hong Kong dollars), but in return you gain access to excellent food (in this case, recipes from the city of Ningbo, near Shanghai, such as delicate, juicy soup dumplings and sweet-and-sour fish), in an exclusive but usually unpretentious setting.
Real estate had nominal negative returns in two of the three periods, and in one period it produced a positive real return.
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