[sourcery]

Your chart is misleading, for several reasons:

• It's not adjusted for inflation.
• It's not adjusted for taxes.
• It's "cherry picked" to cover a favorable date range. A chart covering the period from 1720 to 1789 would paint a very different picture.
• Even in your chart, an investor who bought in 1929 would have had to wait 20 years just to break even--not counting trading commissions, taxes, inflation or opportunity costs.
• Trees do not grow to the sky. Stock market prices do not go anywhere, up or down, in a straight line. Every up trend is followed by a down trend, at all time scales. The implications of that are actually negative to your thesis, and should giver everyone cause for significant concern.

[supercat]

Even in your chart, an investor who bought in 1929 would have had to wait 20 years just to break even--not counting trading commissions, taxes, inflation or opportunity costs.

True. And a more reasonably-defined "break-even" would be 30-40 years. On the other hand, if someone isn't expecting to retire for 30-40 years, that may not be so much of a concern. Obviously for people who will need their money sooner than that, having enough invested in other things to last until the cyclical bear is over is a very good idea.

[esopman]

The log-linear chart is interesting, but IMHO, counters the thesis that things are basically OK.

Any technician can draw lines through bumpy graphs; the % growth lines keyed back to the 10 level are not as significant as, for example, a line drawn through the 1935 to 1985 (100 to 1000) 50-year range. This line would fall below the equity growth 'bubble' which coincided with the secular retreat in interest rates over the last couple of decades. Such a line would show about 5,000 on the DJIA in 2010.

I would encourage all Freepers to plot the last 100 years of AAA corporate bond rates. The linkage of cash inflows to equities from 20 years of declining rates is clear. The rates are bottoming (even overshooting on the bottom; yes, the Fed will ease).

We are in a secular bear market. Not even a war bounce with be sustained. Equities will not recover until we have worked through the real estate bubble, the credit bubble and who-knows-what-else. We're talking a few years here...sigh.

[GraniteStateConservative]

I have $20,000 available from a life insurance payout from my Dad. My wife and I don’t need the money (as long as I’m not fired). We are risk averse even though we are in our 30s. What would you do with it?