The boys have officially reached the stage where there are always more kids in the house than I remember inviting, and somehow they’ve all migrated to the living room and kitchen, staying up late and being loud. It’s been… less than peaceful. So I’ve started fixing up the detached garage and sending them out there. It’s unfinished, but it has an AC, an old couch, a rug, and a TV, which is apparently all teenage boys require to be perfectly content. I’ve started calling it "the basement," because growing up in Pittsburgh, that’s where all the guys hung out, and I loved that basement.
We have one cat, Coconut, who is apparently an escape artist of the highest level. I genuinely have no idea how she’s getting outside. No doors are open. No one sees her leave. She’s basically Harry Houdini. The problem is, we’ve got coyotes around here, and she’s just a big white and gray ball of fluff wandering around like nothing could possibly go wrong. Meanwhile, she looks thrilled about it. Frolicking, chasing lizards, living her absolute best life. And to make matters worse, she comes back in only when she feels like it, and not even treats can convince her otherwise.
Grammy came to town for spring break from Pittsburgh, and Senay came down from the University of Florida, and we spent the week playing cards and a very competitive game of Monopoly, which Grammy somehow won yet again.
If you’ve been reading my articles each week, you know that I believe in the incredible power of the stock market. I’ve talked at length about how investing in stocks is essential to your long-term financial well-being.
Yes, there is a war going on, and it will have zero implications on your long-term success. If you keep thinking about it, please stop.
I’ve often discussed how one knows what the market will do. No one. Anyone you see on TV or read online is guessing.
I can’t believe I’m doing this, but…
Now I’m going to make a big prediction.
Are you ready?
A portfolio of stocks will double in value over the next ten years. The Dow will be at 100,000 in ten years.
Have I completely lost my mind? Are you staring at the screen, thinking this sounds crazy? I get it. But let me walk you through why I believe this has a real chance of happening.
I like to think of myself as somewhat of an economic historian, so let’s look at the past century.
From 1920 to 1930, the Dow Jones rose from 107 to 244. That’s a 128% increase. More than double.
Now let’s look at the other decades:
1930s: Down from 244 to 151 (–38%)
1940s: Up from 151 to 198 (+31%)
1950s: Up from 198 to 679 (+242%)
1960s: Up from 679 to 809 (+19%)
1970s: Up from 809 to 824 (+2%)
1980s: Up from 824 to 2,801 (+239%)
1990s: Up from 2,801 to 11,357 (+305%)
2000s: Down from 11,357 to 10,583 (–7%)
2010s: Up from 10,583 to 28,868 (+172%)
2020-2025: Up from 28,868 to 48,382 (+80%)
At first glance, you might say, "Those numbers don’t support your argument. In a lot of those decades, my money wouldn't have doubled."
That’s fair.
But here’s what’s missing: dividends and compounding.
When you look at the Dow or S&P 500, you’re only seeing price changes. You’re not seeing the dividends those companies paid along the way.
Take the 1940s as an example. The market rose about 31% over the decade, or roughly 3.2% per year.
Not exciting.
But the average dividend yield during that time was about 4.7%.
So the real return wasn’t 3.2%. It was closer to 7.7% per year.
And then comes compounding.
Compounding means your money earns returns on the returns it has already made. At an annual 10% return:
$100 grows to $110
Then $110 grows to $121
Then $121 grows to $133 …and it keeps building on itself.
At 7.7% per year, over ten years, your money doesn’t just grow. It more than doubles.
When you factor in dividends and compounding, your money would have doubled in 7 out of the last 10 decades.
There are no guarantees. There never are.
But based on history, dividends, and the power of compounding…
I still like the odds.
Oh yeah, by the way, I wrote about this same concept ten years ago and predicted the Dow would hit 35,000 by 2025.
From 2015-2025, it went from 17,832 to 42,392.
Be Blessed,
Dave