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There was a nice piece on - you guessed it - CNBC earlier this week, about how an investor who bought the S&P 500 the day before they shut the doors for good at Lehman and held on 'til today would now be up more than 130% on the position, while earning about 11% a year on their stake.
CNBC also points out that it was a scary trip up the mountain as the markets continued to decline for another six months after Lehman Bros tanked - call it "L-Day."
Factually, they're not wrong: Those returns are what they appear to be. And the volatility was insane, with sharp countertrend rallies being crushed in short order by waves of selling. You could reasonably call a lot of that return "combat pay" for those brave enough to hang on.
130% over 10 years isn't bad... but it's still not really enough for all the risk that you took along the way.
In fact, indexing rarely gives you enough return to compensate for the risks you take when investing in stocks.
I know a way you could make four or five times what the S&P 500 would - with far less stress, too...
About the Author
Tim Melvin is an unlikely investment expert by any measure. Raised in the "projects" of Baltimore by a single mother, he never attended college and started out as a door-to-door vacuum salesman. But he knew the real money was in the stock market, so he set sights on investing - and by sheer force of determination, he eventually became a financial advisor to millionaires. Today, after 30 years of managing money for some of the wealthiest people in the world, he draws on his experience to help investors find "unreasonably good" bargain stocks, multiply profits, and build their nest eggs. Tim tirelessly works to find overlooked "hidden gems" in the stock market, drawing on the research of legendary investors like Benjamin Graham, Walter Schloss, and Marty Whitman. He has written and lectured extensively on the markets, with work appearing on Benzinga, Real Money, Daily Speculations, and more. He has published several books in the "Little Book of" Investment Series and a "Junior Chamber Course" geared towards young adults that teaches Graham's principles and techniques to a new generation of investors. Today, he serves as the Special Situations Strategist at Money Morning and the editor of Peak Yield Investor.
