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The End of Bull Markets: Don’t Expect Great Returns Over the Long Term

This article was written by in Investing. 7 comments.

Ever since I’ve been investing, nigh on six years now, the general sentiment has been that stocks are the key to long-term growth. Investing in the stock market is risky, but bumps even out over long periods of time resulting in close to double-digit annual growth. Young people like myself (six years ago) should invest as much as possible in a broad stock market index and wait several decades for results.

Allan Sloan from Fortune Magazine is warning that the high returns that have been typical for long-term investors in the stock market over the past generation should not be expected to continue in the upcoming decades.

Barring a miracle – or the creation of a New Math of the market variety – there’s no way we’ll ever see a bull market along the lines of what so many of us grew up with. During that enchanted period, the boring old S&P returned more than 19% a year. When you include compounding, your money more than doubled every four years. Pretty slick.

That was more than twice what stocks earned in the previous 56 years, when they returned about 9%. More than half of that was from dividends, which were almost triple their current level.

I’ll be satisfied with a 9% return on the money I invest for retirement.

Don’t expect another bull market [Fortune Magazine]

Published or updated March 4, 2008. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 7 comments… read them below or add one }

avatar klerg


Can’t say that I agree with this. I don’t think that it’s the end of the world but I think that the stock market is in for a bumpy ride.

Also, this may come off as a bit Machiavellian but I’m gonna say it…

I’m GLAD that the market’s dipping.

Why? Well the obvious reason is that stocks are cheap and while I don’t buy single stocks, I dump cash into mutual funds and believe that I’m getting stuff on sale. But more profoundly, we are always told that we have to be in the market for the long haul and there will be dips along the way-some dips worse than others. I’ve only been investing hardcore for four years and I’ve yet to experience a dip like this. I’ve had double-digit mutual fund growth since I started, and this includes both a growth fund that’s averaged 35% over that two-year period and a target date fund that’s averaged over 15% over the same time-frame.
now come for me to take it on the chin a bit and test the “long haul” theory that we’ve heard so much about. It’s time to see if I have the guts to still put $$$ in my accounts even though the market’s tanking. If I have the guts (and I think that I do), then I’ll be able weather any changes that come along.

Am I thrilled that my Roth and brokerage accounts are dipping? No. But in order to have success in investing, I must have patience in the tough times so I say, bring on the dip in the market a little more (but just a little more) so I can see what I’m made of.

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avatar That One Caveman

I agree. 9% is enough for me. All I care about is that I get consistent long-term returns that significantly beat inflation in the long run.

But, of course, I won’t turn down a 19% annual growth period!

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avatar KC

It depends on your definition of bull market. I think the incredible gains we’ve seen since 1995 are due to internet trading, incredibly low commissions, and the ability of the common man to get in on investing thanks to the aforementioned. But there is still a lot of money out there in the economy and in the hands of individuals. Although it’s going to be bumpy for a while, we’re still going to see bull markets for decades.

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avatar Emily

There is a lot of negative press about all things related to the economy right now. But many individuals are still going to do well in and out of the market because all this negative news is reminds them that we each have to take responsibility for our own futures.

Buckle down and make it happen, right?

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avatar David B.

If you look at the data the market has returned a little under 9% since the 1950′s. I think what we will see here is a regression to the mean. For those of you who know math will understand that if we do regress to the mean a few years of poor (if any) growth must occur…

For those of us with many years in front of us it would be wise to continue DCAing into the market.

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avatar budgetsaresexy

I have to agree that 9% is a pretty nice return when all is said and done.

Luckily/unluckily for me I’ve only recently jumped into the investing world, so at least I don’t have my hopes way up there!

On the other hand, it’s def. looking like a great time to invest when possible.

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avatar Stuart

I disagree, i still think we we see pretty good annual gains in shares, due to increasing investment from ‘the common man’, particularly in emerging economies, made easy by the internet. This however will ensure volatility remains extremely high as there will be a lot of people trading on sentiment, overselling on the lows and jumping on the bandwagons on the highs.

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