Since 1871 the US stock market has spent two months in every three below a high it had already reached. An investor holding it spent sixteen years out of every twenty-five below ground he already owned. That is the best documented market in history, and the most successful. Elsewhere the arithmetic is worse.
On a statement those years look flat. Prices kept rising through all of them, so standing still quietly made you poorer. The pattern belongs to markets. The cost belongs to where you live, so what follows is in rands.
- 16 of 25
- Years out of every 25 spent below a high already reached · US stocks, 1871 to 2026
- 0%
- How those years look on a statement. There is no line for what they cost.
- −60.6%
- What they cost your buying power, at 6% inflation · 32.6% at 2.5%
01 · The cost nobody shows you
Almost every portfolio compounds. But a bigger number is not the point. What matters is what the money buys, after fees and after inflation.
At 6% inflation prices double about every twelve years. So a year your balance does not move cost you 5.7% of everything you own. No bill arrives, and no later gain hands it back.
| Years your balance sits flat | At 6% | At 2.5% |
|---|---|---|
| Two | −11.0% | −4.8% |
| Four | −20.8% | −9.4% |
| Eight | −37.3% | −17.9% |
| Sixteen | −60.6% | −32.6% |
Zero is the most expensive number on a statement.
02 · The test you can run yourself
Pull out your statements. Mark every stretch where your balance sat no higher than a level it had already reached, and add the years up.
That total is not a pause. It is the part of your life your money stood still while prices climbed. And you do not buy that ground back once. Every recovery is you paying again for a level you already owned, at higher prices.
You carried the risk for twenty-five years. You got paid for nine.
03 · The same rand, measured in what it buys
- R3,240,000 · 4% above inflation, uninterrupted · arithmetic, not a forecast
- R1,000,000 · 6% a year, a standstill
- R174,000 · earning nothing
The answer is not less risk. Money earning nothing is the third line on that chart. Nor does holding for longer fix it, because the sixteen years sit inside the long hold rather than instead of it.
What this leaves you with
- Two-thirds of an investing life goes on buying back ground you already owned, at higher prices each time.
- A flat year is not a neutral year. At 6% inflation it costs 5.7% of everything you own, and nothing later gives it back.
- So what decides where you end up is not the return. It is how much of the journey runs uninterrupted, and that cannot be promised. It has to be built into the investment itself.
Money that earns, puts it straight back to work, and keeps moving forward, never stopping to buy back ground it already owned. That is the difference between growing a number and growing real wealth.