No matter what you think about the stock market, one thing remains true. It has a track record of delivering exceptional, long-term returns.
Whether you compare it to Treasuries, bonds, or cash, the stock market consistently outperforms the competition.
If you have doubts, I don’t blame you. Wall Street has taken investors on a wild ride over the past year.
We’ve seen rallies gain momentum, only to be met with sudden sell-offs. Not to mention the periods of frustrating sideways chop that seem to go on forever, leaving many scratching their heads…
In fact, it wasn’t until last month that the S&P 500 broke out of its yearly trading range.
Yet for many investors, the future continues to look uncertain as the Fed sticks with its long-time 2% inflation target. Last week, it raised interest rates by another 0.25% during its latest Federal Open Market Committee (FOMC) meeting.
Now, if you’re thinking about selling out of the stock market or staying away from it, that would be a mistake.
Today, I’ll explain why the stock market has a proven ability to deliver superior long-term returns. I’ll also show you why it remains a reliable wealth-building avenue for investors… and how you can take advantage of one rare event about to hit the markets.
Surging Against All Odds
Over the past 100 years, stocks rose through recessions, global conflicts, currency crises, and the Fed hiking interest rates.
Yes, we saw severe downturns, crashes, and plenty of sideways fluctuations. The second part of the 20th century was a particularly tumultuous period in our history.
Even so, stocks have been on an upward trajectory. You can see that in the chart below…
Take the 1970s, for instance. That’s when soaring oil prices triggered a period of stagflation. Prices skyrocketed, and the value of money dwindled. The purchasing power of the U.S. dollar even declined by over 30% at one point…
…Until the Fed swooped in to save the day.
The central bank’s then-chairman Paul Volcker raised the federal funds rate to fight inflation. Rates went from an average of 11.2% in 1979 to 20% in June 1981.
But his hawkish policy had ramifications. It caused the 1980-1982 recession.
Americans were hurt by inflation and the Fed’s “remedy” of raising rates. Today, something very similar is happening.
And yet, despite these headwinds, the stock market was a winning bet for investors. By the end of the 1980s, the S&P 500 had delivered an average annual return of roughly 17%.
Here’s what that means in dollar terms…
Suppose you invested $10,000 in the S&P 500 at the outset of this turbulent decade and chose to let it ride. In that case, you would be marveling at $40,000 in returns at the decade’s end.
That’s a clean 4x return on your investment.
Now, since 1957, the S&P 500 has returned about 12% annually on average. In contrast, the median inflation rate in the U.S. is around 3%. That means, on average, the stock market beats inflation by 9%.
It also means that $10,000 invested in the stock market 66 years ago would have grown to more than $6.3 million today.
But that’s not all. The stock market generates greater wealth than other assets…
Leaving Others in the Dust
The stock market doesn’t just beat inflation. It also outperforms most investment alternatives.
If you put just $100 into the stock market back in 1928, you’d be sitting on an impressive $761,711 today.
Corporate bonds? Around $54,238.
U.S. Treasury bills? About $8,527.
Here’s how this scenario – with a $100 investment put in each of these assets over a 95-year period – looks visually.
As you can see, stocks outshine other conventional investment options by a wide margin.
And if you’d decided to keep that $100 under the mattress, you’d be facing an extraordinary 95% loss in value.
There’s one interesting exception… which is investing in residential real estate. Research indicates that this strategy yields similar returns as stocks in the long run. That’s if you factor in the property’s gradual value appreciation and rental income.
But there’s a catch – real estate has a significant drawback of being illiquid. Unlike stocks, which are quick, easy, and inexpensive to trade, real estate is quite the opposite.
What This Means for You
Even though stocks deliver great returns over the long term, the average investor typically makes a mere 2% annual return on their investments.
Now, the S&P 500 historically achieves around 12% yearly gains. Since 2009, it has surged approximately 15%.
So, why do most investors fall short?
The issue is that the average investor often attempts to time the market by buying low and selling high. But that’s hard to do for those who aren’t professional traders spending their days in the stock market.
That’s why investors usually end up buying stocks when they are pricey and selling them when they are cheap. The former is driven by greed or FOMO (short for “fear of missing out”), and the latter is due to fear of losing money.
But in order to reap attractive returns, investors must embrace some volatility, especially as we navigate the remainder of 2023.
In fact, on September 20, a rare, generation-defining event we have only seen three times in the last century is about to hit the markets…
It will send America’s most loved stocks plummeting down. At the same time, this event will push a select group in a corner of the stock market to all-time highs.
Twenty-one billionaires are already positioning themselves for what’s about to come – including Elon Musk, Ray Dalio, and Warren Buffet. And investors who prepare for this “Stock Panic” could have the chance to secure a seven-figure nest egg.
That’s why on Thursday, August 3 at 10 a.m. ET, I’m revealing all the details in a special presentation. I’ll also give away the name and ticker of one of the top ways to play this rare market event.
To register for the event for free, click here. And I’ll see you there.
Editor, Inside Wall Street with Nomi Prins
P.S. Right now, the world’s most powerful investors are pouring their money into one single investment.
It’s already outperforming the S&P 500 by 4x… tech stocks by 5x… and Bitcoin by 3x. And on Thursday, I’ll give away my No.1 free stock pick so you can profit alongside these billionaires.
To sign up for my event, just click here.