Wednesday, August 20, 2008

Optimism watch: S&P 500 Index and major global events

If you have a long time horizon, you can survive just about anything. At least, that's the implication of a graph I looked at today.

Fidelity Investments is showing off a graph called "S&P 500 Index & Major Global Events" in "Putting Short-Term Market Turmoil in Perspective: U.S. stocks have proven resilient over the long term."

It's a graph of the S&P 500 index with major events from JFK's assassination in 1963 to this year's collapse of Bear Stearns.

The article concludes:  "U.S. stocks have proven to be resilient over the long term. A $10,000 hypothetical investment in a diversified mix of large-cap domestic stocks at the start of 1963 would have been worth more than $865,000 at the end of June 2008."

$865,000 is a nice big number. But how many investors think in terms of a 45-year time horizon? 

On the other hand, maybe that's the point. A 45-year time horizon isn't just for college kids. Even middle-aged folks may live another 45 years.

Does this graph give you comfort?
Susan B. Weiner, CFA
Investment Writing
Writing that's an investment in your success

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