It’s always great to hear other voices, opinions, and strategies when it comes to investing. Evan from Stock Investing 101 was nice enough to share his view on the market. Let me know what you think and if you agree with him.
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The great news is that over the past 10 years all of the major American stock market indexes, the Dow, S&P 500, and the Nasdaq have produced negative returns.
The Dow opened the decade at 11,500 and is now down to around 10,500 at the time of writing this. For ten years most companies made money and expanded. Companies like McDonalds (MCD), Coke (COKE), and Proctor and Gamble (PG) have made billions and billions of dollars over the past ten years and their stock prices have hardly budged.
Considering the stock market generally returns around 10% a year, the Dow “should” be over 20,000 today! That is not to say that the Dow will hit 20,000 any time soon or it should be at 20,000, but the gains that investors did not receive the past 10 years should materialize over the next ten and beyond.
The 70’s were rough on the stock market and for the economy in general. Unemployment and inflation were high, economic growth was low, and the stock market stayed relatively flat. However over the next twenty years the stock market made an amazing run.
I do not know how 2010 will treat investors, or 2011 for that matter, but I do know over a long period of time, 25 or 50 years the stock market will have positive returns every time. Instead of complaining that your IRA is down 35% from where it was two year ago or that your IRA hasn’t moved in value over the past 10, buy more! History is in your favor.
Microsoft (MSFT) is certainly worth more today then it was ten years ago, however its stock price has dropped from 58 to 30 dollars a share. There are far more opportunities investing wise today than there was 10 years ago, even if it may seem otherwise.