The Dow opened the 20th century trading at 68. It closed at 11,497, a 16,875% increase, which explodes to 1.8 million percent with dividends.
But of course nobody got these returns, and the ones that achieved even a fraction of them had to endure unthinkable pain along the way. Consider that:
- The low in 1932 was the lowest prices of the 20th century. Stock prices were lower in 1932 than they were in 1900.
- In 1974, stocks were trading at the same levels as they were the winter of 1958.
- The Dow was lower in 2009 than it was in Halloween of 1996.
Look at the chart below and tell me what you see (H/t the data lord. Don’t actually tell me, that was just a figure of speech).
How we approach the market is more a reflection of our personality than anything else. Some people view this chart as a reason to be hopeful, others see it as a reason to always be cautious. Both views are justified.
I see it as a reason to be optimistic yet realistic and everything in between.