Don't Let This Stop You From Becoming A Millionaire
Nobody wants to be the last person to buy into a sucker's rally. But if fear of bad economic times ahead makes you put off investing your money in stocks, you could miss out on the high-return years that could make you truly wealthy.
Sure, there are plenty of reasons why today's markets are making investors nervous. After close to a 50% bounce from March's lows, you may well think that we're overdue for a bear-market relapse. While some recent economic news has provided glimmers of hope, you don't have to look hard to find other, more troubling prospects for the future.
But we've been down this road before. Back then, investors who took a pass missed out on the beginning of the biggest bull market in history.
Take a trip in the wayback machine
Back in 1982, the U.S. was suffering through a different yet equally difficult set of problems. Inflation had recently peaked at nearly 15%, following a series of oil shocks in the 1970s that cascaded throughout the economy. In order to try to bring that double-digit inflation under control, then-Federal Reserve Chairman Paul Volcker raised interest rates substantially and pushed the U.S. economy into a painful recession. Stocks, reacting negatively, destroyed three years' worth of gains and made investors extremely reluctant to commit their money to a market whose stagnation could quickly reduce the purchasing power of their assets.
As it turned out, those who chose to stay out of the stock market had made one of the worst decisions of their investing careers. July 1982 proved to be the low point for the markets, and stocks went on a rampage over the following five years, enough to push the S&P 500 to nearly triple in value by July 1987.