Page 154 - Morgan Housel - The Psychology of Money_ Timeless Lessons on Wealth, Greed, and Happiness-Harriman House Limited (2020)
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world is never that nice. There’s a price tag, a bill that must be paid. In this
case it’s a never-ending taunt from the market, which gives big returns and
COBACOBA
takes them away just as fast. Including dividends the Dow Jones Industrial
Average returned about 11% per year from 1950 to 2019, which is great.
But the price of success during this period was dreadfully high. The shaded
lines in the chart show when it was at least 5% below its previous all-time
high.
This is the price of market returns. The fee. It is the cost of admission. And
it hurts.
Like most products, the bigger the returns, the higher the price. Netflix
stock returned more than 35,000% from 2002 to 2018, but traded below its
previous all-time high on 94% of days. Monster Beverage returned
