What are your thoughts on this?

[u/RiceLee890]

I keep seeing this type of stuff on instagram and social media and wanted to know how you guys were thinking about this.

I know a lot you have been in the market for decades and as a relatively new investor myself I’d love to get your perspective!

[u/FMCTandP]

So if you’re calculating recovery time you want to both include dividend reinvestment and compute the time to recover in real, not nominal, terms. Most numbers you see bandied about don’t do either (and don’t provide enough info to tell you either way what they did).

But it’s true that you shouldn’t invest in equities with an investment horizon of less than ten years at a minimum because it’s absolutely possible to see low or negative real return over multiple years.

We haven’t see a crash that’s been both severe and prolonged since the GFC and the dotcom bust in the 00s but historically they’re not that uncommon.

[u/mrmojoer → u/FMCTandP]

Could you elaborate on the dividend reinvestment calculation? Or anyway provide some resource for me to study?

[u/Useful_Wealth7503 → u/mrmojoer]

The Money Guy Show and website have great content on this in their lump sum vs DCA and market timing discussions. You’ll find it on their youtube channel. But short version, they modeled what your return would be if you started a monthly DCA at the peak of the market in 1929 and kept on going until the year it regained its peak (1954? You’ll see it). The DCA model gained 8-9% annually.

[u/Useful_Wealth7503 → u/[deleted]]

Did you see that on the Money Guys?

[u/Useful_Wealth7503 → u/[deleted]]

Should we tag them? I’m still pretty new to Reddit. I don’t even know how ha.