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November 02, 2009

A long view of the stock market

The stock market has certainly been volatile in the past year, falling dramatically and then staging a partial rebound this year. Many people are understandably very shy about investing in the market. But give us the long view of the stock market. Has it really made money for people over several decades? Listen

Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"The key part of the question is over several decades, because the answer to that specific question is certainly yes. Let me give you a couple of examples. If you invested $1 in the stock market in 1980, you'd have $17 today. If you invested $1 in the stock market in 1950, you'd have $1,200 today. So over long periods of time, over several decades, yes, the stock market does tend to make money for you. But it doesn't always make money for you in the short term. For example, if you invested $1 in the stock market at the beginning of this decade, in 2000, you'd have less than a dollar today. So it really depends on when you get in the stock market and when you get out, but the evidence clearly says the longer that you stay in, the more the likelihood that you'll make money."

Posted by Dave at November 2, 2009 08:00 AM