But, in any case, we couldn’t be where we are without having come from some place before. And to write that off would be akin to ignoring the face in the mirror.
In the case of the stock market, just having finished its worst year in about three generations, we're moving off of an extraordinarily depressed level.
The chart below shows this in quintiles for the past fifty-five years. By pure coincidence, this period begins and ends with the best and worst performances. Over this time, the market compounded at an annual rate of 6.8%. For every down-year, there were nearly three years of gains.
As to 2009, we should at least take comfort in two points:
- Statistically, a repeat performance of 2008 would be extremely remote.
- Of the the ten other years in the same quintile, seven up-years followed for an average gain of 19.4%.
However, let's not forget 2008 for its lessons – and their historical importance. Now, we have that unique opportunity that only comes with such a downturn to completely clean house and remove some pretty big impediments.
If we can accomplish this, then good progress will come.
To you and yours, Happy New Year!