Monday, December 22, 2014

Why Owning Stocks for the Long Haul Makes Sense ... The Stock Market's Historical Performance Points Upward

The only thing certain about the stock market is that it fluctuates. While it generally moves up, it sometimes goes down. Over a long period of time, however, its central tendency is rewardingly upward.

And with only several trading days remaining, 2014 has proved to be another strong year, following on the heels of a gangbuster performance in 2013.

What will happen to prices in 2015, of course, nobody knows. That said, the odds are that stocks will climb higher again next year, based solely on their historical performance. But there are several other positive factors pointing toward higher prices in 2015 as well, such as the improving U.S. economy, higher employment levels, low energy prices, low inflation and continuing low interest rates.

The stock market's very merry 200-year history tells the story:

"The stock market’s merry performance over time

Since 1825, the stock market has produced an annual gain 71% of the time, or 134 times, while losing ground just 55 times. A standard distribution chart, which happens to take the shape of a Christmas tree, shows how for most years, the market moves within a range of zero to up 10%."
Summing Up

In recent years, stocks have been solid performers each year since 2009, as the above chart shows.

And in most of the past 200 years, but by no means all, the market has done well for individual investors.

So if you're not inclined to panic and sell when the market declines, which it inevitably will from time to time, it's always a good time for long term individual investors to be invested in stocks.

And with respect to the rest of 2014 and 2015 specifically, things still look good to me.

Thanks. Bob.

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