It’s been a while since we’ve delved deep into historical stock market data. Therefore, this week I am going to bore the heck out of you. (just kidding)
With the unrelenting bad news all around us, let us allow data and history determine our actions. Let’s stay away from knee-jerk, fear-based, emotional investment decisions.
Fact: In the past 50 years, the stock market was down ten out of fifty years.
Fact: Only five of those ten times saw a double digit decrease. (10%+ loss 10% of the time)
Fact: The stock market, as a whole, has averaged a 10% return for 200 YEARS.
Fact: The stock market is never “due” for a crash. 1942-1972 saw no crash. 1974-2000 saw no crash. 2000-2008 saw no crash. 2008-2020 saw no crash. Were there “mini-crashes” where you might have lost 10% temporarily? Yes. But nothing serious enough to mention.
Fact: If you invested $100,000 in 2010 you now have $355,000.
Fact: If you invested $100,000 in 1990, in 2000 you would have accumulated $499,000.
Fact: If you invested $100,000 in 1960, twenty years later it would have grown to $495,000.
Fact: The United States makes up 40% of the world stock market. China is third at 7%.
Fact: Stock market declines of 5-10% generally require a single month to recover.
Fact: The stock market can be dated back to 1602. It has worked for 400 years. This is not a new concept.
Fact: The wealthiest 10% of Americans own 84% of the stock market.
Fact: Before the financial crisis happened in 2008, the most valuable companies on the stock market were ExxonMobil, General Electric, Microsoft and AT&T. Now the most valuable are all technology companies: Apple, Amazon, Google and Microsoft.
Fact: 1930-1940, 1940-1950, 1950-1960, 1960-1970, 1970-1980, 1980-1990, 1990-2000, 2000-2010, and 2010-2020 all had overall positive returns.
Fact: From 1900-2000 the stock market returned an average of 10.4%.
Fact: $1000 invested in 1900 would be worth $19 million today.
Fact: If you started saving for retirement 30 years ago and dropped $100,000 into a money market, it’s current value would be around $203,000. If the money had been invested in the stock market, the current value would stand at $1,700,000.
Fact: Few people put all of their money into stocks. Bonds are also a key component to most portfolios. Generally speaking, bonds go up when stocks go down.
Fact: If the stock market ever went to zero we would be living in a post-apocalyptic wasteland.
Fact: In August 2000, Fortune magazine published “10 Stocks to last the decade”. By December 2012, a portfolio containing those 10 stocks lost 74.3% of its value. (in other words- nobody can predict what stocks will go up and down).
Fact: Most day traders garner the lowest returns. Between 1992 and 2006, 80% of active traders lost money, and only 1% of them were profitable.
What a reality check, right?