Bear Markets Happen

Source: WSJ

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  1. machinehead commented on Mar 18

    WSJ deserves credit for using a semi-log chart.

    What investors really care about is total return. Strangely, Dow Jones has only calculated total returns on the Industrial Average since Sep. 1987. But Global Financial Data backfilled the Dow’s total returns to 1920.

    During the 16-1/2 year secular bear market from Jan. 1966 to Jul. 1982, the price-only DJIA lost 1.18% annually (above chart). Including dividends though, it gained 3.39% annually.

    Sounds good, until one subtracts 7.03% annual inflation during the period, resulting in a minus 3.64% annual real return for 16-1/2 years. OUCH!

  2. rd commented on Mar 18

    BR – you are clearly not paying attention. Bear markets are passé. Everybody knows that.

  3. Al_Czervik commented on Mar 19

    Since the low in 10/2002, the S&P is up about 161% (8%/yr.) while the CPI is up about 29% (2%/yr.) and the SSA wage index is up about 35% from 2002 to 2013 (2.7%/yr over 11 periods). From 2004 through 2014, US nominal GDP grew about 45.9% (3.8%/yr. over 10 periods).

    There will be corrections, but it seems like a solid case for owning stocks over the long haul, if you are in a position to invest. Technology and the political environment are combining to concentrate the economic spoils. Picketty is right.

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