Ten years ago this October 9, the stock market hit an all-time high level. Over the next 17 months, a disastrous mix of market greed, unintended consequences from poorly conceived financial regulations, and even worse reactions to those unintended consequences caused the stock market to decline by more than half. Thus, October 9, 2007 marked the worst day to invest a lump sum all at once in the stock market in the life of virtually any investor alive today.
And yet, if you had the misfortune of picking that worst day to invest your money, and had managed to stay invested through the barrage of bad news and governmental miscues, your average annual rate of return (as measured by the S&P 500 total return index) would have been over 7% per year. That is, over the ensuing decade, your investment would have doubled.
How much time and energy do you spend worrying about geopolitical events, economic events, or other factors that could affect the value of your investments? If you knew that even if you picked the peak of the market before the worst decline in your lifetime to invest that ten years later you would have still doubled your money, would that help you not worry as much?
-Michael Rogan
