Monday, March 3, 2014

$62 trillion and counting

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.


William said...

And, Scott, your Blog helped me stay fully invested in equities the entire time - plus my fundamental belief that one should do the EXACT opposite of the crowd - namely, what one's friends are doing.

When most of one's friends are investing a certain way, IT CAN NOT POSSIBLY BE CORRECT. The market would never let so many naive, non-professional folks be correct.

William McKibbin said...

Excellent advise from a master...