Weekend Reading: Why Does the Stock Market Go Up Over the Long-Term?
This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
Whatever market woes you might be feeling now, it should hopefully help ease your mind to know that over the long-term, we tend to trend upward. In fact, since 1928 the U.S. stock market has gone up roughly 9.8 percent per year.READ THE ARTICLE
|Whatever market woes you might be feeling now, it should hopefully help ease your mind to know that over the long-term, we tend to trend upward. In fact, since 1928 the U.S. stock market has gone up roughly 9.8 percent per year. |
Why do we continue to gain ground? Despite what some might believe, the market’s continual climb (while non-linear) doesn’t stem from the Fed or low interest rates. Instead, this draws down to economic growth and the fact that corporations are earning more money overall.
Additionally, the market goes up over the long-term simply because in short-term instances, it goes down too. Lows followed by highs are what bring you those big-eyed returns, and if you glance at the graph shown in this article, you’ll see the numerous dips investors have navigated over the almost past-century. As Ben Carlson states here, “The fact that it’s not always easy is one of the biggest reasons the stock market goes up over the long-term.”
Always remember: Earnings go up; not just due to increased profitability, but inflation as well. Over the long-haul, this clearly results in the stock market being one of the most well-indexed asset classes to inflation.