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Five Brutal Years Teach Investors to Sit Tight

Five Brutal Years Teach Investors to Sit Tight
Photograph by Spencer Platt/Getty Images

Five short, mostly brutal, years ago, Henry Blodget made what I think is the best call of his career. In a candid series for Slate, the former stock analyst ragged on the Wall Street marketing and fee machine that he once cogged, urging readers to “invest in a low-cost equity index fund for 50 years. Yes, it’s not a get-rich-quick scheme, and there is fine print: This performance is not guaranteed. You must reinvest all dividends. You must make the investment in a tax-free account. Inflation will maul you. But no investment strategy is more likely to make you rich than this combination of low costs, equity returns, and time.”

I was thinking about Blodget’s advice last week, when the Standard & Poor’s 500-stock index visited levels it hadn’t reached since the end of 2007. Mind you, the milestone has few investors out there walking on sunshine. The market, after all, is still shy of its October 2007 high, which is only a nominal peak when you consider it was pretty much at the same spot at the turn of the century, when the Cult of Equity was actively indoctrinating millions.