What Reason Do YOU Have For Not Investing In 2019?

2/10/2019.  There is no doubt in my mind - the biggest barrier to success for individual investors is overcoming our faulty personal psychology. 

We worry too much about the financial headlines, global events, Trump this, Brexit that, and end up doing nothing. Meanwhile, we miss out on the opportunity to put our money to work for us over the long term.

As a general rule, money that you need to access within the next two or three years is usually best left safely in your bank or term deposit account  But if your time horizon is longer than that, history shows the value of investing – and staying invested as long as possible.

The problem is, it’s too easy to find ‘reasons’ to not invest.  

Below you’ll see a helpful list of historical reasons to not invest, since 1934.  The numbers in parenthesis are the percentage change in price of the Dow Jones Industrial Average for that year (source).

1934 Depression (4.14%)

1935 Spanish Civil War (38.53%)

1936 Economy Still Struggling (24.82%)

1937 Recession (-32.82%)

1938 War Clouds Gather (28.06%)

1939 War in Europe (-2.92%)

1940 France Falls (-12.72%)

1941 Pearl Harbour (-15.38%)

1942 Wartime Price Controls (7.61%)

1943 Industry Mobilizes (13.81%)

1944 Consumer Goods Shortages (12.09%)

1945 Post-War Recession Predicted (26.65%)

1946 Dow Tops 20 – Market too high (-8.14%)

1947 Cold War Begins (2.23%)

1948 Berlin Blockade (-2.13%)

1949 Russia Explodes A-Bomb (12.88%)

1950 Korean War (17.63%)

1951 Excess Profits Tax (14.37%)

1952 U.S. Seizes Steel Mill (8.42%)

1953 Russia Explodes H-Bomb (-3.77%)

1954 Dow Tops 360 – Market too high (43.96%)

1955 Eisenhower Illness (20.77%)

1956 Suez Crisis (2.27%)

1957 Russia Launches Sputnik (-12.77%)

1958 Recession (33.96%)

1959 Castro Seizes Power in Cuba (16.40%)

1960 Russia Downs U-2 Plane (-9.34%)

1961 Berlin Wall Erected (18.71%)

1962 Cuban Missile Crisis (-10.81%)

1963 Kennedy Assassinated (17.00%)

1964 Gulf of Tonkin (14.57%)

1965 Civil Rights Marches (10.88%)

1966 Vietnam War Escalates (-18.94%)

1967 Newark Race Riots (15.20%)

1968 USS Pueblo Seized (4.27%)

1969 Money Tightens – Markets Fall (-15.19%)

1970 Columbia Invaded – Vietnam War Spreads (4.82%)

1971 Wage Price Freeze (6.11%)

1972 Largest U.S. Trade Deficit Ever (14.58%)

1973 Energy Crisis (-16.58%)

1974 Watergate (-27.57%)

1975 Resources Shortages (38.32%)

1976 Limit to Long-Term Growth (17.86%)

1977 Inflation Increases (-17.27%)

1978 Interest Rates Rise (-3.15%)

1979 Oil Price Skyrockets (4.19%)

1980 Interest rates at All-Time Heights (14.93%)

1981 Steep Recession Begins (-9.23%)

1982 Worst Recession in 40 Years (19.60%)

1983 Market Hits New Heights (20.27%)

1984 Record Federal Deficits (-3.74%)

1985 Economic Growth Slows (27.66%)

1986 Dow Nears 2000 – Market Too High (22.58%)

1987 Market declines 20% in One Day (2.26%)

1988 Saving and Loan Crisis (11.85%)

1989 Bank Failures Increases (26.96%)

1990 Persian Gulf Crisis (-4.34%)

1991 Dow Tops 3000- Market Too High (20.32%)

1992 Global Recession (4.17%)

1993 Health Care Reform (13.72%)

1994 Mexican Peso Devaluation (2.14%)

1995 S&P 500 Tops 620 – Market Too High (33.45%)

1996 Greenspan Warns of “Irrational Exuberance” (26.01%)

1997 Asian Financial Crisis (22.64%)

1998 Russian Currency Devaluation (16.10%)

1999 Presidential Impeachment (25.22%)

2000 Dot-Com Meltdown (-6.17%)

2001 Terrorist Attack on World Trade Centre (-7.10%)

2002 Corporate Malfeasance (-16.76%)

2003 War in Iraq (25.32%)

2004 Decline of the Dollar (3.15%)

2005 Hurricane Katrina (-0.61%)

2006 Rising Gas Prices (16.29%)

2007 Subprime Mortgage Crisis (6.43%)

2008 Credit Crunch (-33.84%)

2009 Collapse of Financial Institutions (18.82%)

2010 European Crisis – Greece (11.02%)

2011 Downgrade of U.S. Debt (5.53%)

2012 Political Polarization in the U.S. (7.26%)

2013 US Government Shutdown (26.50%)

2014 50% Collapse of Oil Price (7.52%)

2015 Asylum Seeker surge into Europe (-2.23%)

2016 UK Referendum for Brexit (13.42%)

2017 Donald Trump becomes President (25.08%)

2018 Trump Starts Trade War (-5.63%)

2019 Your Reason Here (....)

What growth would you have missed?

Here’s how your money would have grown if you had invested in the constituent companies of the Dow Jones, and reinvested dividends over the term:

Last 5 years – 1/9/2014 to 30/9/2019

77% growth = 12.1% annualised

$1000 invested is now $1770

Last 10 years – 1/9/2009 to 30/9/2019

258% growth = 13.6% annualised

$1000 invested is now $3580

Last 15 years – 1/9/2004 to 30/9/2019

284% growth = 9.4% annualised

$1000 invested is now $3840

Last 20 years – 1/9/1999 to 30/9/2019

303% growth = 7.2% annualised

$1000 invested is now $4,030

Last 25 years – 1/9/1994 to 30/9/2019

1137% = 10.6% annualised

$1000 invested is now $12,370

Last 30 years – 1/9/1989 to 30/9/2019

1993% = 10.7% annualised

$1000 invested is now $20,930

(Source.  Note the above ignores the effect of inflation.)

By the way, here's a free and simple Excel tool, to switch between compounded growth and annualised growth.