01-24 Bohannon show appearance re stocks
Hi Terry, Radioaholic me heard you on the air again last nite and wanted to ask...Per the "not losing $$ in the stock market in any 20 year period," doesn't it matter HOW MUCH the market's made you in any of those 20 yr. periods?
Terry Says
The story I told is based on research by the renowned Ibbotson market historians, now a division of Morningstar. The statement is: "There has never been a 20 year period where you would have lost money in a diversified portfolio of large company American stocks, with dividends reinvested -- even adjusted for inflation! Their history goes back to 1926, and they examined every 20-year period up to the present. It's an argument for a diversified, long-term investment strategy that is sheltered (as inside a retirement account) from taxes, and has the dividends (a significant portion of total return -- nearly 40%!) reinvested. Now, some 20-year periods were far more profitable than others -- but none were losses! Among the most profitable, consider that the DJIA was around 800 in 1982. So if you started investing then, and held for 20 years, even the tech crash in 2000 would not have destroyed that pattern. (And remember this was large-cap companies, so most tech companies didn't qualify back then!)
