In the Long Run, We're All Dead

In the Long Run, We're All Dead
Posted Mar 26, 2008 12:22pm EDT by Aaron Task in Investing
Related: ^SPX, ^DJI, SPY, TLT

When the market is as wild as it's been of late, it's easy to get sucked into the daily drama. But it's always important to keep the long-term view in focus.

And the long-term reality is this: The U.S. stock market has been essentially flat for the past nine years and has wildly underperformed other assets, including Treasuries, as detailed by The Wall Street Journal.

Key takeaways from this grisly track record:

* Owning stocks, even for a long period, is not a guarantee of success as many came to believe in the 1990s. There also the debate over buy and hold vs. market timing to consider.
* Having a diversified portfolio of assets -- not just diversity among your equity portfolio -- is critical to long-term investing success, if not survival.
* The current morass does help set up the next bull market cycle, and U.S. stocks are cheap relative to Treasuries, real estate, and international markets. That may help in the short term, but the stock market has a history of moving in 17-year cycles, which means we may be only about halfway through the current long-term slump.