by However, once this is done, what is not important, in the larger scheme of things, is timing the peaks and dips of the market. During the great financial crisis, for example, I spent an inordinate amount of time as a journalist talking to so-called experts about when they thought the stock market would go up or down. In retrospect, I think it was a waste of time.
Suppose you had been as wrong about the market cycle as possible, but you had still decided to become a long-term stock investor and, in fact, pursued it despite colossal losses. That would have meant buying at the market peak of October 9, 2007. He would have lost most of his money in the spring of 2009, but would have made it back, and then some. These are the returns of the S&P 500 from October 7, 2007 to January 18, according to FactSet:
Considering price alone, the index gained 7.1 percent annualized, or 207 percent cumulatively.
With dividends reinvested, the index gained 9.3 percent annualized, or 325 percent cumulatively.
I readily admit that something better could have been done by buying and selling at “the right times.”
That would have involved knowing in real time when the market was going to rise and fall, and no one knows reliably for long periods. You could also have bought and sold the right stocks. Simply owning Apple, for example, and nothing else, in the same period, and never selling it, would have given you a total return of 3,760 percent. If you did that, bravo.
But what are the right stocks to buy over the next 15 years and what is the optimal time to buy or sell? No doubt, some people will get the answers right.
I’m not even going to try. This market peak means many things to many people. I take it simply as another affirmation of the wisdom of investing in low-cost, long-term buy-and-hold. Let’s leave this peak behind and hope there are many, many more.
