Chris P pointed us to the "Financial Comeback" calculator, surely a well-meaning joke from the folks at the Times. Here is how one gets to make a 40% loss back in just six years!
Surely, someone has to tell them about simulation. They have to assume a probability distribution on the annual returns, and show us some sample paths. Using the average annualized historical return in essence wipes out all variability and no wonder it's smooth sailing upwards. Eternal optimist.
Here is Chris' comment:
The interactive features of this chart, however, impressed me. The smooth adjustment to the chart as one slides the control, including the automatic choice of appropriate axis labels, is very nice indeed.
Okay, they want to trademark the name of the calculator so perhaps this is serious.
Reference: "Calculate your financial comeback", Jan 6 2009.