This chart covers 225 years of the S&P 500, adjusted for inflation.
Every crisis you were taught to fear is on it. Look how small they are.
The Napoleonic wars took markets down for 12 years. On the chart: a dent. The Civil War: 5 years down. A wiggle. Post-WWI inflation, 11 years. The oil shock and Vietnam, 13 years. Each one felt like the end of the world to the people living through it. Each one is now a footnote on a rising line.
Three lessons from two centuries:
– The market spent roughly a quarter of the last 225 years going nowhere. Investors who quit during those stretches missed everything that followed.
– The worst drawdowns came from wars and inflation, not valuations. What kills a generation of returns is rarely what investors are watching.
– Every secular bear market had a start date and an end date. Nobody living through one knew either.
Your investing life is maybe 50 years. This chart contains four and a half of those lifetimes. In every single one, the patient owner of American businesses came out ahead.
The hard part was never finding the right chart. It was staying in it.