.The Investment That Destroyed the SP 500
The Investment That Destroyed the S&P 500
Notes From The Field By Simon Black January 21, 2020 Bahia Beach, Puerto Rico
You’ll be surprised to see what investment has destroyed the S&P 500
The year was 1990, and the Soviet Union was on the verge of collapse. The Berlin Wall was still in the process of being destroyed, and East and West Germany were set to reunify later in the year.
Nelson Mandela was released from prison in February, and the South African government began talks to end Apartheid soon after.
Iraqi dictator Saddam Hussein invaded Kuwait in August.
Ghost, Home Alone, and Pretty Woman were the top movies of the year. Janet Jackson’s Rhythm Nation was the top-selling album.
And the S&P 500 reached an all-time high of 360.65 in May.
It’s hard to even imagine that number anymore; the S&P 500 just closed last week at an all-time high of 3316, more than nine times higher than its peak in 1990.
And that’s impressive growth, no doubt. Investors who have had the discipline to buy and hold over the past three decades have been rewarded.
This is, of course, the most common investment advice doled out by money experts and best-selling financial authors. They tell people to invest in an S&P 500 index fund, and to basically keep it there for decades.
The experts insist there will always be strong years and weak years, but the overall long-term track record is pretty good.
And this is true to a degree. But let’s go back 20 years to early 2000, when the S&P 500 was at roughly 1500.
If you had bought then and held until now, that works out to be an average annual return of just 4%.
4% is better than zero… but it’s hardly anything to write home about.
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