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Daily Traders Edge

9 Uncomfortable Facts About the U.S. Stock Market

January 26
10:13 2021

Things feel pretty comfortable in the stock market right now.

Pretty much anything you put your money into has worked spectacularly well since stocks bottomed this past March.

The crash last year shows how risky investing in stocks can be but it was over in the blink of an eye. There have been plenty of other instances where investors in U.S. stocks have been much more uncomfortable for longer periods of time.

Here are 9 historical facts about the U.S. stock market that can serve as a reminder:

1. The stock market was underwater from 1929-1954. There wasn’t a single new all-time high from the peak in September 1929 through September 1954.

This was on the price level only, but even if you were to include dividends it would have taken nearly 14 years to breakeven following the 80%+ crash during the Great Depression.

2. The total return from early-March 1997 through early-March 2009 was 5%. It’s a sad, but true fact that the 2008 crash incinerated a dozen year’s worth of gains.

March 2009 was the bottom of an all-time crash but this was still a lost decade and then some for investors in the U.S. stock market.

3. Government bonds outperformed the stock market for 40 years at one point. From March of 1969 through February of 2009, long-term government bonds outperformed U.S. stocks.

To be fair, this was also near the bottom of one of the worst bear markets in history. And long-term bonds were ahead by a razor-thin margin — 8.63% to 8.57% for annual returns.

This environment also included the highest interest rates in our country’s history. But the point remains that government bonds beat stocks over a four-decade span, which could cause many an investor to question the idea of a risk premium in stocks over bonds.

Continue Reading at A Wealth of Common Sense

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