The Past Decade Has Been One of the Best Times to Invest in the Market—Ever

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It's been one of the best decades, ever, to be an investor in the U.S. stock market.

The U.S. economy has been growing for 10 straight years and, as of July, this expansion is now the longest in history. And that's not the only record this economy has set, either. The bull market in stocks, meaning a market where investment prices are rising, passed the 10-year mark earlier this year—and, in July, became the longest ever.

Here's a closer look at those achievements.

The economic expansion, by the numbers

The economy goes through distinguishable stages, depending on whether gross domestic product—also known as GDP, or the sum of the value of all goods and services produced—is growing quickly or slowly, or even contracting.

Each of these stages—from expansion to peak to contraction to trough—can last anywhere from months to several years. Measured from peak to peak, the average length of an economic cycle is nearly five years.

How do economic cycles work?

America has now been in one stage—expansion—for as long as it typically takes the economy to go through two complete cycles.

Here's how the current economic expansion stacks up against others on record:

  • It's the longest. This expansion began when the 2007-2009 recession ended, in June 2009. In July, it surpassed the prior record of 120 months of economic growth—March 1991 to March 2001—to become the longest ever, according to figures from the National Bureau of Economic Research.
  • But it's not the strongest: This expansion is far from the best in history, though, when you consider how much the economy has actually, well, expanded. The cumulative total of quarterly GDP growth is 25%, making this expansion the fifth best since the end of World War II. First place goes to an eight-year expansion that began in 1961, which had cumulative quarterly GDP growth of almost 52%, according to figures from the Federal Reserve Bank of St. Louis.
  • And it's not the best for workers. Job growth in the past decade has also been slower than in prior expansions. Employment has jumped 12% since 2009. That's far less than the 17%-20% gains seen in expansionary periods during the 1960s, 1970s, 1980s, and 1990s.

The bull market in stocks, by the numbers

Just as the economy goes through cycles, so does the stock market. In a bull market, prices trend up, and in a bear market, stock prices fall (or an index falls) at least 20% from a recent high.

The last bear market was between October 2007 and March 2009, when the S&P 500—the benchmark for the U.S. stock market—fell almost 57%. Since then, stock prices have been rising and haven't dropped more than 20%, based on closing levels. There were two close calls, however, in mid-2011 and late 2018.

Here's how the current bull market stacks up against others on record:

  • It's the longest. Some analysts on Wall Street argue about the length of this current bull market, based on how they calculate bull and bear markets. But based on closing levels, which most strategists use as a measure, it's the longest in history at more than 10 years old.
  • But it's not the strongest. The S&P 500 has surged more than 330% since the low of March 2009. Yet that growth is still second best to a bull market that began in 1990, which saw the S&P 500 surge 417%, according to figures from S&P Dow Jones indexes.

Why the past decade has been so great for investors

The return for the S&P 500 doesn't tell the full story of why the past 10 years have been so rewarding for investors.

You can earn dividends, or cash payouts for corporate earnings, on your investments. And if you reinvest those dividends to buy additional shares, your returns will be even greater. When considering returns including reinvested dividends, or total return, the S&P 500 has risen more than 440% since March 2009.

Investors have also seen trading costs have come down over the last decade. And they have access to an increasing number of low-cost investment options like ETFs, which are investment funds tied to the performance of an underlying index.

Even with some of its ups and downs, the past decade has been one of the best, ever, to be an investor. While investors can't expect every decade to be like the last, it's an important reminder of why you should continue adding money to the stock market over time and stay invested.

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