{"id":23088,"date":"2021-01-12T09:45:38","date_gmt":"2021-01-12T13:45:38","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=23088"},"modified":"2021-01-24T18:07:33","modified_gmt":"2021-01-24T22:07:33","slug":"stock-market-history","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/stock-market-history\/","title":{"rendered":"Stock Market History: Can the Past Predict Trends?"},"content":{"rendered":"\n

What is stock market history? What can stock market history tell us about stock trends and investment opportunities<\/a>?<\/p>\n\n\n\n

Stock market history can help explain some past stock market trends. You can evaluate the past to see how stocks have changed and fluctuated over time. <\/p>\n\n\n\n

Read more about stock market history and why it matters.<\/p>\n\n\n\n\n\n\n\n

Stock Market History<\/strong>: 75 Years of Lessons<\/h2>\n\n\n\n

In hindsight, over the past 75 years, stocks have trended consistently upwards. Here\u2019s a chart showing the S&P 500 on a log scale:<\/p>\n\n\n\n

\"\"\/<\/figure>\n\n\n\n

(Shortform note: Long-term stock charts are often shown in log scale since they better reflect percentage changes and compounded growth, as opposed to changes in absolute values.)<\/p>\n\n\n\n

Over the long term, stocks have tended to rise\u2014in the stock market history of the S&P 500, the annual return is roughly 10%, without adjusting for inflation. Graham suggests this consistent long-term performance supports his advice that all portfolios should have a portion in stocks. <\/p>\n\n\n\n

However, he heavily cautions against simplistically extrapolating from the past, and against the delusion that stocks will always increase <\/strong>and so are worth investing in at any time, at any price. These conditions tend to breed wanton overpricing, which tends to invite a steep correction downward.<\/p>\n\n\n\n

While the general trend is up and to the right, in the short-term, stocks fluctuate. Look more closely at the chart, and you\u2019ll see more detail:<\/p>\n\n\n\n