is investing in the stock market a good deal?
by Carl Nyberg, Tue Feb 17, 2009 at 09:24:22 PM EST
One of the claims that used to be made was that even if you invested your money at the peak of the stock market in September, 1929 when the Dow was 381.17 you'd still come out ahead if you just kept your money invested with the stocks that make up the Dow.
With the stock market being down a bit I decided to calculate the rate of return if one invested at the peak in 1929. The Dow closed today (yesterday) at 7552.60. It's 79 years, five months. I called it 79.5 years for simplicity sake.
The rate of return for investing in the stock market in Dow stocks is a little under 3.83%. It's not bad, but it's not that much better than investing in certificates of deposit and other more conservative instruments.