Page 9 - Exposed Final

Chapter Two: How Long is Long-term?

During my workshops, I ask my audience what the stock market return is

over the long-term, and I typically hear 10%. I respond, "that is just about

right.” My next question is what is considered long-term? Here's where it

becomes interesting. The typical responses are between 10 and 30 years. I

then pull out one of the most famous charts produced by Wall Street that

illustrates a 10% plus performance over an 84-year period. Now that's long-

term! What we have are people overlaying their 10-30 year time horizon

onto an 84-year stock market history to earn approximately 10%.

First, I could care less what the stock market did 50 years ago. It's when

you receive the return that counts. Keep in mind that many of the traditional

investment models became popular during the bull market of the ‘80s and

‘90s. Since then, the country has experienced a tech market crash, a

housing crisis, and a credit crunch. Qualifying for a home mortgage loan
went from no documentation necessary to needing every piece of

documentation known to man, twice over!

Oh yes, and don't forget 2008, when the stock market crashed and

decimated portfolios by over 30%-50%.

In the current economic environment, the only constant in life is change!

Nonetheless, many people are still using traditional investment strategies,

such as:

 invest for the long-term because stocks always go up over time;

 diversify to help reduce losses in your portfolio; and

 buy stocks to keep pace with inflation, etc.