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The following charts were created in an attempt to rationally view the
financial world during the extremely stressful times following the equity
market’s peak in the year 2000. I believe the “What If’s” chart is
invaluable during periods of market despair. Although virtually every
ten-year period shows significant fluctuations within the period, there is a
high tendency for ten-year returns to be close to normal.
What If’s – Various Dates:
The various dates for the What If’s charts provide historical evidence that this way of anticipating the future is useful. Times when recent returns have been the worst are often the best times to invest. These times are often also times when faith in the future is most in doubt. Each time I update the “What If’s” chart, I find myself wishing that expected returns could be stronger. Unfortunately, this would only be possible if long-term returns were to rise, or recent returns would have been lower. The delight of anticipating exceedingly high returns must be tempered by the pain and fear experienced in October 2002. If there is a lesson in all this, it seems to be to trust in the economic system to provide reasonable returns to prudent owners of businesses, to take what the market gives and not to allow emotion to overwhelm logic. Clearly, this is no small accomplishment! S&P 500 Index: Annual Returns for Various Periods
After the Bear & Long Term Returns
Multiple Year Period Stock
Returns
Dow Jones Industrial Average--Thousand Point Milestones
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