With the 10th anniversary of Sept. 11, 2001 fast approaching, it seems timely to look back at one of the most tumultuous and, for many investors, frustrating decades in stock market history.
Merely looking at a graph of the S&P 500 brings to mind Coney Island's recently restored Cyclone roller coaster. There were two bursting bubbles the tech mania followed by real estate accompanied by recessions and bear markets. But each set the stage for powerful rallies. An investor who simply slept through the decade would have awakened to a positive (albeit modest) return.
But for investors who got caught up in the emotions of the moment, the wild swings were devastating. Mutual fund inflows and outflows continue to demonstrate that investors are prone to a powerful herd instinct, throwing money at stocks when they're high and when stock tips are the talk of every social gathering, and bailing out only after the crash is far along in its slide.
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