Photographer: Michael Nagle/Bloomberg

You Just Doubled Your Money If You Invested at the 2007 Market Peak

Updated on
  • That’s the total return from investing in S&P 500 at 2007 top
  • Never late to buy stocks if investment horizon is long enough

If you bought the S&P 500 at this time 10 years ago, you watched more than half your investment erased. You heard buy-and-hold pronounced dead and watched fellow investors pull $200 billion from equities. 

You also doubled your money.

Or just about, anyway. Using a version of the S&P 500 that reinvests dividends, the index has now pushed its gain since its Oct. 9, 2007, top to 98 percent. Down 55 percent at the market low in March 2009, the benchmark gauge has made all that back plus a lot more, posting annualized gains of more than 7 percent for a decade.

“It was in the early 2000s and again 2008, where a lot of market pundits came out and said, ‘that’s the end of 10 percent a year for stocks,”’ said Rich Weiss, chief investment officer and senior portfolio manager of multi-asset strategies at American Century Investments. “Stocks have done what they almost always have done and proved yet again that even with the 2008 disaster, they return 7, 8 percent a year annualized. That’s intact. Hallelujah.”   

For investors wondering whether it’s time to sell as voices of caution get louder by the day, the data is one persuasive argument against. Stocks have a tendency to go up, thanks to corporate America’s efforts to boost profits. Right now, analysts expect S&P 500 earnings to grow more than 10 percent a year through at least 2019.

Sure, hanging in there during the 2008 financial crisis was pain that no investor cherished. But sticking it out meant recouping all your losses in 2013 and reaping bigger gains since. It’s been a fact of life in markets that virtually every bull market in American stocks has ended at a higher point than the previous one, with the S&P 500 peaking at levels that are on average 68 percent higher than the prior cycle top.

In other words, even if today marked the end of this bull market, one could expect reasonable returns if the investment horizon is long enough.

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