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What If Stocks Don’t Always Go Up? Advice for Millennials

The U.S. stock market could be headed for a lost decade. Here’s what to do.

When the history of the contemporary financial age is written, there’s one phrase that’s nearly guaranteed to earn incorporation: “Stocks only go up! ”

Dave Portnoy, a former sportswriter turned day trader, made a witty remark last summer that was meant to both amuse and provoke. However, if you’ve invested in US equities since the market bottomed out in 2009, you’re probably in agreement with Portnoy. A lot of expert asset managers would agree with you.

Whether Portnoy’s concept is likely to be turned on its head is perhaps the most significant question for people considering investing money today, when equities are among the most expensive they’ve ever been by several measurements. To put it another way, “what if stocks don’t always go up?” ”

There are reasons to think this fantastic period for the U.S. stock market might soon be followed by a prolonged hangover, possibly lasting a decade or more. Such a stretch of disappointing equity returns would have profound implications for millennials and generation Z. The standard advice around financial planning and retirement saving that’s worked so well lately — put your money in an index fund that

According to Bloomberg statistics, investors who bought an index fund that mirrored the 500 Index and reinvested dividends earned a 13 percent average annual return over the last decade.

Even a devastating global epidemic, which created a deep recession and massive unemployment, only slowed the rise of U.S. equities for a short time.

Young investors may believe that high profits are almost certain in the next years. If only stock prices rose steadily all of the time.

Consider the FTSE 100, a stock market index that includes some of the world’s most prestigious pharmaceutical, oil, mining, and consumer goods businesses. In terms of price (and ignoring the effect of dividend reinvestment for a moment), the U.K. The barometer is presently lower than it was two decades ago. It isn’t the only one.

The Stoxx Europe 600 index is still well behind its dot-com boom high, while the MSCI emerging markets index peaked in 2007 and has yet to recover. The market that most refutes Portnoy’s claim is Japan, where the Nikkei 225 index is still around 40% below its high in 1989 when a big financial bubble burst.

Reported by: Ehtisham

Written by: Shermeen Rehman

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