Sunday, January 2, 2011

Investing: It's when you start and when you finish

 Metrics: In Investing, It’s When You Start and When You Finish

If you look at the graph at the above website by clicking on "Metrics" above, you will notice that the best 20 years for investing in the last 100 years was:

BEST 20 YEARS
1948-68
+8.4% a year


And the second best 20 years were:

2ND BEST
20 YEARS
1979-99
+8.2% a year


But one must also consider the worst 20 years were: 
 WORST 20 YEARS
1961-1981
–2.0% a year


So, as a long term investor one must be prepared to endure the cycles where one might lose 2% a year in order to benefit hopefully from years where the return is 8% or more. Studying the graph gives us some indication of where the U.S. has been. But because of Global Climate Change, China, India and a myriad of other factors it is a big unknown where the U.S. Economy is headed in the short or long term at this point.

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