Friday, October 10, 2008

The 10-Year Return On The Stock Market

As of the drop in the stock market yesterday, the S&P 500 had a 10 year return of -7.62%. Maybe putting my money under my mattress would have been a good idea after all?

For the record, I still would recommend investing in the stock market as part of your long-term financial strategy. Now is actually probably a good time to buy. The current financial crisis also illustrates why it is good to have diversification in your financial portfolio. If you also have investments in more than just the stock market -- such as real estate (okay maybe not the best example), bonds, your own business, higher education (human capital), etc. -- you help avoid the likelihood that times like this completely wipe out your investments. Like the old proverb says -- don't put all your eggs in one basket.

The current news looks bad, but one piece of encouragment I take from the graph above is that for most of the last 10 years, the market has been above where it is now. I expect it eventually will be again.

(via Google Finance)

1 comment:

thinking said...

This is the legacy of trickle down economics.

It's amazing how Bush has wiped out the gains of the Clinton years.

If somehow the Constitutional term limit on Presidents were repealed, is there any doubt that Clinton would trounce Bush in an election?

The middle class have gone backwords, and the culture has been one of only taking care of the wealthy.

We have a record deficit, a war we cannot afford, and no doubt the worst financial crisis since the Depression. Now I don't think the crisis is as bad as the Depression, but it's far more severe than anything since then.

We have a leadership vacuum because the current administration has zero credibility left with the American people.

We will get out of this mess, but only with some real change. That starts on Nov 4 with voting for Barack Obama.