The chart below shows the Dow Jones Industrial Average dating back to 1945. The area that I want you to focus on is from 1966-1982, where if you invested in the Dow you would have gone absolutely nowhere in 16 years. More importantly during that time the percentage of total household financial assets in stocks and mutual funds fell to record lows.
During the current 12 year sideways movement the percentage has also dipped dramatically to the lowest level since the last 1980's. What does this mean to you and I? Well it means that when investors give up on stocks due to under performance it is the best time to begin building a portfolio of stocks.
The percentage began to pickup in early 1982, similar to the bottom in early 2009. For the next 18 years the stock market rallied to new all-time highs. Could a similar situation be upon us? I am not sure the rally lasts two decades, but what I do know is that this chart is evidence that using a contrarian strategy for investing will work over the long-term.
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