Guiding your life’s biggest financial moments

Notice the fairly steady rise in the Dow Jones until about 30 seconds – the year 1925 – when the line literally begins to jump off the chart. Of course, as we all know, that big leap was followed by the crash of 1929, and stocks made little progress for about two decades until after World War II, when the next big leap came. Further peaks occur around the 1980s and mid-1990s.

What’s striking is not just the size of the handful of really giant leaps in the Dow, which the chart illustrates well by continually resizing until you can barely see the original surge of the years. 1920, but also how suddenly they occur, often after many years in which the market just seems to be grinding sideways.

The lesson: In the long run, it’s a safe bet that you will make money on the stock market. But these gains are extremely erratic. If you plan to buy and hold, you are likely to endure many mediocre years. But when the lighting finally hits, you can count on catching it.

On the other hand, if you think you can sit around until the day before the next bull market, your timing must be perfect. If your return to school is only due in a few weeks, you will be leaving a lot of money on the table. If you’ve missed the 10 best days in the market over the past two decades, your overall return has been cut in half, according to JP Morgan Asset Management’s 2020 Retirement Guide.

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