Investment Results At Stock Market Peaks

Dr. Jeremy Siegel of The Wharton School of Business performed an important study on the long-term returns for investors that made lump-sum investments during the peak of a bull market that lasted at least four years. He measured lump-sum market investments in June 1901, September 1906, September 1929, February 1937, April 1946, and December 1968 and tallied these results over a ten, twenty, and thirty year period.

During the subsequent ten years, the results are disappointing: A $1,000 investment in these peaks collectively grew to $1,250.

During the subsequent twenty years, the results are still somewhat disappointing: A $1,000 investment grew to $2,150.

However, once the measurement period becomes thirty years, the returns are more moderate and come close to meeting basic investor expectations: A $1,000 investment grew to $5,900.

This, incidentally, is why I treat buy and hold as distinctly different decisions and do not subscribe to the “If … Read the rest of this article!