Graph of this issue: https://pbs.twimg.com/media/DrfbPq6WwAAcjw_.jpg
When you were born might be the single most important factor when determining your experience in the market. It’s also the one that is completely out of your hands.
From 1926 to today, there are 993 rolling ten-year periods. A person just starting to invest could have seen a market that gained as much as 596% or lost as much as 37%.
The Great Depression left scars on an entire generation. Between 1930 and 1951, only eight people were hired to work on the NYSE trading floor. If we were to experience another catastrophe like this today, the Dow would be below 3,000 in September 2021. If I saw stocks fall 90%, I don’t think what happened next would influence me at all. The Dow could rise to 50,000 by 2030 and I would kick and scream the whole way up, with a tin foil hat on for good measure.
People in the 1960s were certainly aware of what their parent’s experienced in The Great Depression, but it wasn’t their experience. They knew about the crash, but they couldn’t remember it.
Think about people who came into their prime earning and investing years in the late 1970s. They remember the oil embargo. They remember waiting in line for gas. They remember high interest rates, and they certainly remember high inflation.
In 14 out of 36 months from 1978-1980, CPI came in over 1%. In the 452 months since, that’s happened just 6 times. $1 after inflation shrank to $0.72 in just 36 months. This sort of shock stays with you forever.
How do you think the S&P 500 returns will be in the next decade?
Were you born at a lucky time, for investing in the stock market?
Submitted November 17, 2018 at 08:31AM by gorillaz0e https://ift.tt/2qRCI3q
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