I decided to run the numbers and see what would happen if one started investing $1200 a year into the DJIA in January 1929 and invested the same amount every year.
Of course it's a thought experiment since in those days you couldn't 'buy' the DJIA at $1200 a year. But now, with index funds, ETFs, etc. it's possible.
Interesting results:
1) by the market's bottom in 1932, you would feel like a fool: you would have invested close to $5000 and have no more than $2400 to show for it.
2) keeping up through the market's turn, one is soon vindicated: by 1936 you are ahead of your total inputs, and ahead of where you would have been investing in treasuries. After a vicious bear market in 1937-38, you're back above the line in 1939... even though the DJIA itself is still about half the level it was when you started.
Of course it's a thought experiment since in those days you couldn't 'buy' the DJIA at $1200 a year. But now, with index funds, ETFs, etc. it's possible.
Interesting results:
1) by the market's bottom in 1932, you would feel like a fool: you would have invested close to $5000 and have no more than $2400 to show for it.
2) keeping up through the market's turn, one is soon vindicated: by 1936 you are ahead of your total inputs, and ahead of where you would have been investing in treasuries. After a vicious bear market in 1937-38, you're back above the line in 1939... even though the DJIA itself is still about half the level it was when you started.
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