Do Stocks Always Go Up? The Truth That Will Surprise You
You've probably heard this:
"Stocks return an average of 10% per year."
Yes, that's true. And at the same time, it's very misleading.
Let's talk about what's really going on, without the complexity and investment fog.
10% Per Year? ...Only on Paper
Imagine a hospital.
The average temperature of all patients is 98.6°F. Great, right? Except one has a 107°F fever and the other is... dead.
The average checks out. Reality doesn't.
And that's exactly how stocks work.
Yes, US stocks (S&P 500) have returned roughly 10% annually over the last 100 years. But do you know how many times the return was between 8-12%?
Only 8 times in 100 years.
Most of the time, it looks like this:
| Year | Return |
|---|---|
| 1933 | +54% |
| 1995 | +38% |
| 2008 | -37% |
| 2022 | -18% |
One year you're a king. The next year you want to sell everything.
This is normal.
The Longer You Hold, The Less Stress
Now here's the important part.
Look at how your chances of profit grow when you simply hold your investment:
| How Long You Hold | Chance of Profit |
|---|---|
| 1 day | 53% (coin flip) |
| 1 year | 74% |
| 5 years | 88% |
| 10 years | 95% |
| 20 years | 100% |
Yes, you read that right.
In the last 100 years, there is not a single 20-year period where you would have lost money on the S&P 500.
Wars, crises, bubbles, COVID... All survived.
Time is stronger than any panic.
One Image That Says It All
Short-term: chaos
One day. One month. Red numbers, panic, uncertainty...
Long-term: growth
Ten years. Fifty years. Green numbers, patience, wealth. The more you "zoom out," the clearer you see: Long-term, the market grows.
As mentioned in other articles, those who are rewarded are the patient ones who can simply wait.
What If You Invest at the Worst Possible Moment?
Imagine you have really bad luck.
March 2000 - dot-com bubble
- You invest $10,000
- Market drops 50%
- The 2008 crisis hits
- You wait 13 years
Today? Over $70,000
October 2007 - before the financial crisis
- Investment of $10,000
- Drop of 57%
- Recovery takes 5.5 years
Today? $45,000
February 2020 - right before COVID
- Drop of 34% in a few weeks
- Recovery in 5 months
Today? $18,500
Even the unluckiest investor eventually made money. All it took was not panicking.
The Biggest Mistake: Selling at the Bottom
All these returns only apply to those who held.
| Crisis | Held | Sold in Fear |
|---|---|---|
| Dot-com | $70,000 | $5,100 |
| 2008 | $45,000 | $4,300 |
Once you sell, the loss is permanent.
That's why Buffett says:
"I lost half. But I didn't sell anything."
Until you sell, you haven't lost anything.
Invest All at Once, or Gradually?
The data tells us clearly: Investing all at once works out better in 68% of cases.
But...
Regular investing has one big advantage: peace of mind.
What works best?
- You have nerves of steel -> invest immediately
- You're scared -> spread it over several months
- You don't have savings -> invest regularly from your paycheck
The best strategy is the one you can actually stick to.
What to Remember
1. Stocks don't always go up. Drops are normal. 2. Long-term, they do grow. Historically, always. 3. Time is your greatest ally. 4. The worst thing is panic and selling. 5. The best move is to start and stay the course.
If you have questions, email me at vymerd@gmail.com.
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