Money Can't Resist Stocks

 |  Includes: DIA, SPY
by: Terence Chan

An interesting chart from Birinyi Associate's Ticker Sense blog. It shows the 10-year rolling returns of the S&P 500 (chart below). The grey areas are the periods when the market's 10-year return has turned negative. While the chart shows that any buy-and-hold investor who got into the market 10 years ago is experiencing a negative return, a look at broader history shows that these periods are merely anomalies when compared to the natural tendency of stocks to go up.

In theory, this can be explained by the fact that there are finite number of shares of stock out there, while the amount of money that can be available to invest in stocks can be infinite. What more with the massive and concerted amount of money printing being implemented by governments around the world! The average 10-year return going forward for periods when past 10-year returns were negative is 163%, while the minimum return was 78%. Thus, the question posed by the blog to you is: "Where will you be 10 years from now?"