Ten Year loss in the S&P 500 on Par with the Great Depression

In the ten-year stretch from Sept. 1929 to Sept. 1939, spanning the worst years of the Great Depression, the stock market dropped a full 50%, adjusted for inflation. Look out, the current decade (Feb. 17, 1999 to Feb. 17, 2009) appears to yield the same decrease: the Standard & Poor’s 500 stock index is down roughly 50%, also adjusted for inflation.

But this difficult period has not been all skull and cross-bones: six-month certificates of deposit “have yielded a real total return of roughly 12%” and the value of residential homes in large cities has increased 30% over the same period, according to Business Week’s Michael Mandel.

With many investors' savings sitting in once-promising equities, the question of whether to stay in stocks or bail out is on many people’s minds.

Staying in stocks could decrease the value of your investments to the point that they “may never reach their original value, much less show a profit.”

On the flipside, bailing out and going into safer assets says “you are giving up on any potential of an upside” if the market has a big rebound.

The market will always fluctuate and whether your glass is half-empty or half-full, and long term history says more growth is ahead. But as they say on TV, “past returns are no guarantee for future performance.” How much are you willing to bet on the long-term future of the US economy?