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Author: TMFSandman Big red star, 1000 posts Feste Award Nominee! Old School Fool Coverage Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 6722  
Subject: Re: Growing Your Portfolio Date: 11/16/2013 1:30 AM
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one year up 20%, next doen 30%, next down 10%, next up 5%

It's great that you recognize the nonlinear nature of stock market returns! Most people, when they read that the stock market averages 8-9% returns over long periods don't understand that it's a rare year that the market actually returns 8-9%. It only averages out to a positive ~8% over time (~6% capital appreciation due to earnings growth and inflation plus another ~2% in dividends) as the years go by.

Sure, one year it's down, one year it's up, but there have been more up years than down years over history, and over long periods this has tended to average out to mid to high single digit returns.


Mike
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