The last ten years have been very difficult for the stock market. As a matter of fact, it has been one of the worst ever. The average 10-year return is negative 3% from the fourth quarter of 1999 to the first quarter of this year. That’s a negative that almost never happens.
It’s the type of thing that can get to you and make you think maybe the stock market is not where you make money. But looking at past time periods where it’s been below average performance -- 10-year time periods that averaged less than a 5% return -- what was found was very encouraging.
Ninety–one times that happened. The worst return we have ever seen after a substandard period was back in October 1939 through September 1949, and while it averaged 8% over those 10 years, the average after a substandard period over the next 10 years the market typically goes up 15%.
The very best we ever had was back from 1982-1992; it averaged 19% per year average annual return. The important thing is 91 out of 91 substandard 10-year performances have all been positive in the next 10 years, so let’s hope history repeats itself.
