History Of Stock Market

Historical stock market performance is not always a good indicator when trading stocks. Although it can help a person get a feel for trends, actual performances can`t really be plotted on historical data alone.

In 2008, looking at the S & P 500 index which is a good stock market indicator, it plummeted 37% but the five previous years it saw substantial gains with 2003 coming in at a 28.7% gain. On the simple average the stock market loses or sees negative numbers once in every four years.

If you were judging long term stock market performance by this indicator alone it would lead you to believe that three out of ever four years will be profitable in the stock market. This is true to a point but many other factors need to figured in to be certain of your chances.

Historically the stock market has seen many years in a row bring in winner after winner and yet it can also have years in a row in a losing category. From 1980 to 2000 the S & P 500 index posted only 2 losing years but at the turn of the century it posted three straight losers.

Profit/loss, strength of the dollar and the soundness of the economy are just three factors that are, along with historical data, helpful indicators of how well or poorly a stock will perform. The current year we are in, 2009, the market is in a downtrend caused by many factors. All of these present factors have to be accounted for along with historical data.

Although the historical performance of the stock market can`t be depended on totally it can be used to help in your decision process. One thing to remember with the stock market is that it should always be a long term commitment and very diversified.