Monday, March 3, 2014
According to Bloomberg's calculations, the current market cap of global equities ($62.5 trillion as of yesterday) now exceeds its pre-recession high. Equities have risen by a staggering $37 trillion since their lows in early March, 2009, in addition to paying about $6.5 trillion in dividends. Investors everywhere were shell-shocked by the collapse, and with good reason: fortunes were wiped out almost overnight. But now, even those who never sold their stocks are about 15% on average better off today than they were just before the 2008 crash, on account of having received more than six years' worth of dividends which, if reinvested, would be worth about $9 trillion today. In other words, a $10,000 investment in global equities at the peak of the market in late 2008 would be worth about $11,500 today. A similar investment in Fidelity's Prime Money Market Fund would be worth about $10,500 today.
Even with the earth-shaking financial market turmoil of recent years, a buy-and-hold strategy has paid off over a period of only 5-6 years.
Posted by Scott Grannis at 3:25 PM