On MSCI Returns; Quality Companies akin to DoT

 MSCI Returns

Wiki has a page on MSCI World Index annual returns. I re-produced it in chart form below. 

From 1970-2020, MSCI World Index provides annual returns of 9.8%. The worst drawdown is around -42%, occuring between 3 years of negative returns in 2000-2002. Thereafter, it is till 2006 before the index reach/exceed the previous high in 1999.

Before the 3 years of negative returns in 2000-2002, the index tripled during 1992-1999. Hence, the world index may be quite overvalued in end 1999, leading to 2000-2002 negative returns thereafter.

The 2000-2002 negative returns may imply that those who used MSCI world index as their main investment during retirement may need to have other asset besides equities to avoid drawdown of equity position and also add on to their equities during years of negative returns. This could be also why 60/40 or 70/30 stock-to-bond portfolios are common allocations. 

Buying Quality Companies akin to Damage over Time (DoT)

I played action-rpg games such as Grim Dawn. Certain skills in Grim Dawn have damage over time (DoT) e.g. X damage every second over 5 seconds. 

Buying Quality Companies with growing earnings seem akin to DoT effect, as the investor benefits from growing earnings and hence higher share prices, as time passes.