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Stock Market reassurance.
Taylor Larimore 03-19-2006, 11:57 AM | Post #170662 | 
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Hi Diehards:
Most of us have a very long investment lifetime. Forty working years plus thirty retirement years for a total of 70 years is not uncommon. One of our biggest mistakes is to make decisions based on short-term ups and downs of the market.

The most important chart I have seen, is the chart on the cover of Professor Jeremy Siegel's highly acclaimed book, "Stocks for the Long Run. This chart shows the total return of the the U.S. stock market from 1802 through 1997.

$1.00 invested in 1802 became $7,470,000.00 in 1997. After inflation, the $1.00 became $558,945.00--still a very substantial return.

What is surprising to me is not so much the long-term compound return, but the remarkable consistency of the percentage increase in value when viewed from the perspective of the long-term investor.

This is how that $1 grew (figures are approximate). The percentage increase is in brackets.

1997...........................................................$7,470,000 ... (8.3X)
1980.....................................................$900,000 ... (4.5X)
1960...............................................$200,000 ... (2.2X)
1940..........................................$9000 ... (2.3X)
1920..................................$4000 ... (5.0X)
1900.............................$800 ... (2.7X)
1880......................$300 ... (7.5X)
1860.................$40 ... (4.0X)
1840.............$10 ... (2.5X)
1820........$4 ... (4.0X)
1800..$1

For a long-term investor who simply buys and holds the entire stock market in their equity allocation, these figures can be very reassuring.

Best wishes.
Taylor

Originally posted in thread: 48839
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