By investing in stocks, you risk losing money and no investor will be satisfied, despite the fact that his profit decreases after investments to the selected asset. When people say that investing is the way to wealth, it’s easy to remember those difficult years in which the stock market was shattered.
The ups and downs of major indices in the first weeks of February again reminded investors of their fears.
A simple analysis of annual market returns. View this S Index Profitability Infographic&P 500 (including dividends), starting in 1928. These results will provide a comprehensive picture of market performance over the past ninety years..
Having carefully studied this table, you will see that after each catastrophic drop in quotes, an epic take-off follows. We hope this helps you dispel the fear of investing..
1. The winning streak is longer
S index for nine consecutive years&P 500 shows positive results (and this is not the only example of continued growth). The market also observed a nine-year winning streak from 1991 to 1999, an eight-year streak from 1982 to 1989, and six years after World War II. Meanwhile, the longest strip of unprofitable years is only four years that occurred during the Great Depression in the USA. The second two other cases lasted three years, one of which occurred during the period of the beginning of World War II (1939-1941)
2. Ups are stronger than falls
In 2008, the S index&The P 500 fell 37 percent. In 1931, it fell 44 percent. But the difficult years do not look so sad, considering that the stock market has shown that it can grow by a higher percentage. In 1954, the market grew by 53 percent and 43 percent – just four years after that. We see 37 percent revenue in 1975 and a 32 percent jump in 2013. In contrast to every bad year S&P 500 you will find the year when the market grew much stronger in a positive direction.
3. A negative year is replaced by a positive
Since 1928 there were 24 years when the S index&P 500 showed negative returns. In 16 of these cases, the index recovered with positive results for the next year. This means that investors can be confident that in two of three cases the stock market is recovering after an unsuccessful year with higher returns..
4. Two-digit growth
What is the difference between good income and excellent? For most investors, returns above 10 percent are excellent. And since 1928, such an annual income has happened 51 times. S&P 500 showed negative dynamics over the year 24 times (as mentioned above) and only 15 times the market grew by less than 10 percent. In other words, the stock market has shown a tendency not only to rise, but also to increase.
5. Positive income almost every 10 years
The reason financial analysts recommend studying the 10-year income of any investment is that it shows a positive overall return on investment, even if unprofitable years fall in this period. Take a few 10-year intervals starting in 1928 and try to find one in which the total income S&P 500 negative. You will have to work to make the calculations, but analysis of almost any ten-year period will give a positive result. These statistics suggest that investments love patience and do not accept emotions..
6. Five years is enough to recover losses
No one argues that large stock market downturns are detrimental to investment. Recovering all losses in one year is extremely difficult. If you invest $ 1,000 and lose 20 percent, the capital is $ 800. You will need 25 percent profit ($ 200) to return to where you were originally. It’s hard. But the stock market has historically not kept investors waiting too long before they can return to higher earnings.
If an investor lost money when the market collapsed in 2008, there were chances that he would have returned all his invested money and more by 2012. If he faced losses during the recession from 2000 to 2002, he would return to profit in 2006. All this provided that he would cease to replenish capital with new means. Given the infusion of additional investment, during a market downturn, the investor would likely return to growth earlier.
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Can you provide more information and specific examples about the 6 historical facts regarding the stock market and S&P 500?
What are some of the most significant historical events or factors that have influenced the stock market and the S&P 500 over time?