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A Look at S&P 500 Index Returns and Time Horizon
By JLP | June 10, 2009
2008 screwed everything up!
Take a look at the returns for the S&P 500 Index over the last 10, 20, 30 and 40 years:
The last ten years were pretty pathetic and have led to new “research” like this.
Anyway, to get an idea of just how bad 2008 was, I looked at the returns for the same time periods through 2007. The results were quite different:
No, it’s not the end of the world but it will probably take us several years (or longer) to get back to pre-2008 levels. I’m not liking what I’m reading about the economy these days and the steps that our goverment (Bush and Obama) is taking to try to fix things. I have the feeling that the medicine is going to be worse than the sickness.
If anything, this post should illustrate the importance of diversification. I know I write about the S&P 500 Index a lot. That’s because it is the only index I have lots of data for.
Topics: Index Funds, Investing, S&P 500 Index | 4 Comments »
June 11th, 2009 at 3:42 am
I have deep concerns about the steps that the government has taken as well in this downturn. Not only from a national debt perspective, but also a precedent that is being set.
With that said, I am less concerned about the overall market. I think we will seem some socialization impact the market negatively (government run health insurance for example), but I do think it will recover. I think if you look at the market 1-2 years after our major recessions/depression you would see similar numbers. But within a couple of years the returns start to trend back up relatively quickly.
Personally I do invest a fair amount in emerging market funds. I think ultimately the vast majority of growth will be in the global economy, not just the U.S. economy. There is additional risk in that type of investment, especially if the fund invests in companies that are in less than stable countries. But in my opinion foreign markets are worth it.
June 11th, 2009 at 12:53 pm
I think there are some typos in your 1998-2007 numbers…
June 11th, 2009 at 3:02 pm
10 year return looks horrible because 10 years ago we were at the top of the dot-com bubble…
June 16th, 2009 at 1:40 am
These numbers make me dumb..
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