The investment firm Smith Barney had actually a TV commercial in the 80s through the actor John Houseman that sassist “They make money the old fashioned means, theyearnit.”

Well, the better returns that long term stock industry performance provides is definitely earned by investors. They earn it by withstanding days, months and sometimes years as soon as all the media and also financial reports make them feel ordinary old stupid for holding onto stocks.

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It shows up that we are in among those periods now. The lengthy term impacts of the coronavirus are unknowable. But a slowdown in many type of areas of the world’s economic climate is expected.

The industry has moved quickly to reflect the diminished economic growth expectations. But while each scary scenario is different, I thought a look earlier at some of the headlines and also sector reactions of the last ten years would be beneficial. Trade wars, inverted returns, Greek bankruptcy, Ebola, the fiscal cliff, European debt crisis, impeachments- the list goes on.

Below is a table that mirrors something that happens with an excellent degree of regularity- which is regular stock sector declines. This table mirrors eextremely 5% or higher drop because 2008 and the news to which the drops were attributed. Market drops are more like “dog bites man”- i.e. not news.


The next chart shows eincredibly calendar year since 1928 and also what kind of drop an investor had to endure in the time of that calendar year. Five of the last ten years had double digit pullbacks, and also that was a decade of above average performance.


The table below is amazing in that it enables you to view exactly how the whole calendar year turned out. Obviously, these retransforms had to be earned by hanging in there throughout the intra-year drops highlighted in the chart above.


This last table is just the historic probabilities of various drawdowns because 1928. So based upon background, we should expect pullbacks of 10% eincredibly 1.6 years, 20% every 4 years and so on.


And preventing these pullbacks was not the essential to long term success. The vital was enduring them.

So prefer the old ad says, investors “ execute make money the old fashioned means, theyearnit”.

Thanks as constantly and also don’t hesitate to speak to with any inquiries or thoughts.

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Disclosure: Opinions expressed are those of the author but not necessarily those of Raymond James, and also are subject to adjust without alert. The indevelopment has been derived from resources thought about to be trustworthy, but we not guarantee that the forgoing product is specific or complete. Charts in this post are for illustration purposes only.