As the weak housing market and a credit crunch unsettle today's stock market, it's worth looking at the real costs of Black Monday. Consider this: If you had a strong stomach and invested $10,000 on the Tuesday after Black Monday in 1987, you'd have roughly $133,000 today. Yet even if you had terrible timing and invested $10,000 on the Friday before Black Monday, your investment would still have grown to $98,000. Now that $35,000 difference is no small potatoes. (In fact, it's an SUV.) Yet even those unlucky investors who bought big right before the crash have still earned an outstanding 12.1 percent annual rate of return versus the 13.8 percent enjoyed by those perfect market timers.
there is a big difference between long run stock returns in periods of disinflation(90's) and high inflation/deflation. we're in the latter,stocks usually do poorly specially on real terms
The key point is value in real terms after inflation. Factoring in true (not the BS reported) inflation the $10k from 1987 is now worth ?????? certainly not $130k. The other factor is investment age. If you were close to retiring in 1987 and starting to pull down your investment savings you maynot be able to wait out another 2o years. Need to be careful with stats unless the investor is immortal.
I am sure if you pick any 10 year time period selectively you can find good ten year period returns. I.e., if you invested in 1990 and took money out in 2000. It does not really demonstrate anything except that if you hold for the long-term you can wait out sharp drops in the market. Don't forget that 1987 was not a major crash that lasted for years, it was an event that happened in a short time frame. Kind of like saying anyone who went long after 9/11 and held until now. statistics.... say a lot and tell us little.
Well todays 5% feels like yesterdays 20% to many because of how hyped these markets have been in the last 3-5 years. No one is used to seeing the market down, the only thing they expect from this stock market is great returns. What many also do not understand is that the DOW is up over 65% and Nasdaq up over 100% in the last 5 years and that any drop of 2% or more in a given year is just to hard too accept.
hey. show me one time when the US stock market gapped down by 5% or more and that didnt start a long term bull market. show me. enough said.
what about 1929, took a few decades to make your money back in real terms. I dont think stock_trader is willing to wait that long