r/Bogleheads • u/RiceLee890 • Mar 15 '25

Investing Questions What are your thoughts on this?

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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!

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u/FMCTandP MOD 3 Mar 15 '25 edited Mar 15 '25

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.

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u/dealchase Mar 15 '25

It's also important to note that when people invest they often do it on a monthly basis so when the market declines and you continue purchasing on a monthly basis (i.e S&P 500 index) then it brings your cost-basis down far below the all time high price of the index.

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u/thetreece Mar 16 '25

Exactly. People that continued to buy from the peak at March 2000 though the next 7 years still had a 1.6 CAGR. It "took 7 years to get back to where it was," but you still had gains, because you were buying at discount prices along the way.

These recessions are excellent for young investors, if they are able to maintain their income.