If you take any 20 year period, Wall Street has always delivered positive real returns.

Nevertheless, investors ought also to remember the world’s second largest economy, Japan. Its most popular stock-market average, the Nikkei 225, peaked at 38,915, on the last trading day of the 1980’s; this week, nearly 18 years later, it was still only around 17,000, less than half its peak.

Investors who suffered through the Depression, when American stocks fell almost 90% from their peak, at least had a decent dividend yield to hold on to. But the Japanese market has offered a paltry yield throughout this period.

Researchers at the London Business School examined the record of 16 stockmarkets which were in operation over the course of the 20th century. The academics found that only 3 other countries could match the American record of having no 20-year periods with negative real returns.

French, German & Spanish investors all suffered instances where they had to wait 50-60 years to earn a positive real return; in Italy & Belgium, the waiting period stretched to 70 years. It was no good following the famous advice to “put the shares in a drawer & forget about them”; the furniture would not have lasted that long.


1. Markets can remain irrational longer than you can remain solvent.

2. If you know why you bought a stock in the first place, you’ll automatically have a better idea of when to say goodbye to it.