Lance ---
Here's one more "lesson"… about long term "stock market" returns. Note that you said you went to cash in 2011… that means you missed 10% return in 2012. The compounding is done in spikes… up 10 -- down 5 -- up 6 -- down 4 -- down 3 -- up 9. If you're out in the up markets -- then you've completely missed the "total" return for the period. That's why market timing doesn't work. It only works to make you feel good when you can walk around saying "I got out of the market before "X"…. The problem is that you'll also miss out on the next leg up. Investing is about feeling CONFIDENT that over time you're doing what you should be doing. That means then that you have to be invested in stuff that you can be confident in. Whatever that is. If you're not a good stock picker - most are not - then the least a guy should do is go with the best name in a category and trust that they're well run and will be around when you need them. It's not rocket science. A guy doesn't even have to be very smart. It's enough just to know the names of the best run companies and let time do it's thing. It's when people try to out smart the market that they get crushed.
Average Stock Market Return per year: Last 5, 10, 20 ... Years
The long-term, more than 100-year performance: Since 1900 (end-of-year 1899), through 2012, I estimate the average total return/year of the DJIA (Dow Jones Industrial Average) was approximately 9.4% -- 4.8% in price appreciation, plus approx 4.6% in dividends. (Some numbers may not add up due to rounding.)
Since 1929 (year-end 1928 -- i.e., before the crash), through 2012, the return was 8.8% (4.6%, plus 4.2%) [note: see The 1929 Stock Market Crash]
Since end-of-year 1932 (i.e., after the crash): 11.1% (7.0%, plus 4.2%)
The average annual stock market return for the past twenty-five calendar years (since 1987) was 10.6% (7.9%, plus 2.7%) The market was up over 40% before the October 19, "Black Monday," crash. After a significant recovery, the Dow actually closed up 6% for the year.
Stock market returns for the last 20 years (since 1992): 9.6% (7.1%, plus 2.4%) In the middle of one of the longest bull markets in history. [see below for additional 20-year periods]
Returns since 1999 (13 years) -- the dot-com bubble year-end peak: 3.4% (1.0%, plus 2.4%).
Returns for the last 10 years (since 2002): 7.2% (4.6%, plus 2.6%) Year-end trough after the dot-com bubble. [see below for additional 10-year periods]
For the last 5 years (since 2007), 2.6% (-0.2%, plus 2.8%) Year-end peak of housing bubble.
Since 2008 year-end trough after the housing bubble: 13.4% (10.5%, plus 2.9%)
For 2012 the stock market (Dow/DJIA) total return was 10.1% (7.3% plus 2.9%)
2012 year-end dividend yield was 2.7%
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