Replies to post #39810 on A.I.M. Users Bulletin Board (AIMUSERS)

[ls7550]

A factor to consider is that that 17% annualised is over the dip period (9.2 years). In practice such dips come along at a rate of around once every 20 years or so, 1970's, late 1990's, near 2010 etc. If for the next 10.8 years SHY just earns its 2.4% post 2006 average then the 4.25 gain factor across the dip compounded with 'just cash' for 10 odd years works out at around a 9% annualised over the 20 year 'full cycle'. Still not bad considering the large proportion of time (low risk) of being heavily/fully in 'cash' for most of the 20 year period.