From the end of World War II through 2007, coal industry stocks returned an average of 6.8% per year. Peabody, Patriot, Arch Coal, Alpha Natural Resources, and Walter Energy returned 8.7% over the same time period. It sounds almost crazy to express now, but for the second half of the 20th century, you could meet your investing goals by owning coal stocks.
Had a kid born in 1989 that started college in 2007? Someone that purchased $150 of coal stocks each month would have earned 8.9% returns and built up a college fund of $79,500 by the kid’s first year at the university. This information doesn’t seem to compute. Coal stocks + $150 per month = Financial Goal Realized is not an equation that improves our intuitive confidence in the rationality of math. It just doesn’t seem to add up.