Fund Blawg

According to this WSJ article "The stock market is trading right where it was nine years ago. Stocks, long touted as the best investment for the long term, have been one of the worst investments over the nine-year period, trounced even by lowly Treasury bonds.".

The chart far right shows the growth Of $10,00 through Feb. 2008.
 

"The Standard & Poor's 500-stock index, the basis for about half of the $1 trillion invested in U.S. index funds, finished at 1352.99 on Tuesday (March 25, 2008), below the 1362.80 it hit in April 1999. When dividends and inflation are factored into returns, the S&P 500 has risen an average of just 1.3% a year over the past 10 years, well below the historical norm, according to Morningstar Inc."

Some might quibble and say that nine years is not a long term period of time. They neglect research that shows that most investors only save for retirement for about 20 years. Given this fact, the nine year return is fully half the 20 year retirement savings period. An investor who started saving nine years ago and is planning to retire in eleven years will not be able to meet their retirment obligations.

The point of this post is not to suggest that stocks are not a good investment, but to point out the fallacy of simply buying and holding and hoping the market will come back. There are times to be in the market and there are times to be on the sidelines in cash.