Why I’m not giving up on Wall Street.

Not that I have any special knowledge; nor am I any kind of finance professional, but Wall Street’s recent bungee-cording seems to have a lot of people in the mid-to-high discombobulation range these days. This seems like a good time to remind everyone: don’t freak out.

Over the last twelve months (ending yesterday), the Dow Jones is up over 9%. Even at its lowest point last week, August 10, the DJIA had grown nearly 4% over the previous year.

Four percent might not be what you want out of your stock portfolio, but it’s better than your mattress.

Here’s some more, just because I like doing this. If you began investing in the DJIA stocks on August 12, 1971 — forty years ago — then as of yesterday, you had earned 6.82% interest, compounded annually.

Nearly seven percent.

If you’d begun in 1981, you got 8.92%. In 1991, twenty years ago, 7.21%.

Now, here’s the kicker. If you had just begun investing in 2001 — and we all know what a bad few years those were — you’ve only earned 0.88% annually to this point.

That’s bad. So bad, your mattress isn’t looking quite the same anymore.

But, look: between 1971 and 1981- another bad decade – you only earned 1.07% annually. That’s better than the last ten years, but hardly what you want. You can get better from a bank.

If you looked at that one percent annually in 1981, threw your hands up and said “screw it!” and put your money in bedding instead, then you missed out on the next twenty years of unprecedented growth.

That’s why I’m still putting money in my Roth IRA every month, and why I won’t stop doing so. Just a little perspective.

(Posted by The TrogloPundit)

Leave a Comment

Share this!

Enjoy reading? Share it with your friends!

Send this to a friend