HISTORY SPEAKS FOR ITSELF
Over the last 123 years, the stock market has spent 75% of the time losing money and gaining it back. This isn't just inefficient.
It's dangerous.
WHEN WILL WE LEARN?
Most of us have heard the pitch. It goes something like this:
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“When you invest in the stock market,
you will average 8-10% a year over
the long term. Now, there will be
ups and downs, but when it’s down,
you just have to wait, and it’ll return.
Don’t sell, just hang in there.”
But this pitch has a significant
problem – history.
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Using Yale Economics Professor Robert Shiller’s data, Lance Roberts, CFA at Real Investment Advice models astounding stock market trends for over 100 years.
Over the last 123 years, the stock market has spent 75% of the time losing money and gaining it back. The dotted lines indicate how long investors would take to recover their initial investment.
Some will argue that if you invest at one of the bottoms, you might get a decent return. But this assertion is based on hope, not history. Especially if you are close to retirement, you can’t afford a 30-50% drop in the market. Nor can you afford to wait 10, 15, or 20 years to get back to where you started.
The problem is that Wall Street is like a casino. They will let you win just enough to keep you playing at the table, but everyone knows that eventually, the house always wins.