But are stocks really risky? In any given year, stocks can go up, but they can also go down. For the last several years the stock market has been riding a wave of expansion. A correction was inevitable.
The year‐to‐year fluctuations of the market are actually irrelevant. What really counts is the long‐term performance of the market over a person’s entire working lifetime, in most cases 45 years. Given that long‐term perspective, there is no time when the average investor would have lost money by investing in the U.S. stock market. In fact, the worst 20‐year period in U.S. stock market history, including the Great Depression and the 1929 crash, produced a positive real return of more than 3 percent. The average 20‐year real rate of return has been 10.5 percent.
To put all this in perspective, when Bill Clinton became president, the stock market was at approximately 3200. After the recent “crash,” it sat at roughly 7600. As Sen. Robert Kerrey (D‐Neb.) points out, “History shows conclusively that long‐term investment in the stock market is safe and profitable.”