Stocks for the Long Run at your Peril?

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By Mark Seed, myownadvisor

Special to Financial Independence Hub

This article from Larry Swedroe recently caught my eye: Should Long-Term Investors Be 100% in Equities? (Own stocks for the long run at your peril).

Interesting headline and catchy, but we know stocks for the long-run can work for long investing periods. Otherwise, nobody would take on this form of investing risk for any reward…

That said, Swedroe does raise a few interesting factoids from his reference in the article about stocks in the long-run:

“Over the 150 years from 1792 to 1941, the performance of stocks and bonds produced about the same wealth accumulation by 1942.”


“Results for the entire 227 years were weakly supportive of Stocks for the Long Run: The odds that stocks outperformed bonds increased as the holding period lengthened from one to 50 years. However, the odds never got much higher than two in three and increased only slowly as the holding period stretched from five years (62%) to 50 years (68%).”

The problem I have with such information, while interesting, is our modern economy is fundamentally different than 1942, let alone 1842, or 1792. I simply don’t see the value or point in referencing any stock market data that goes back 200+ years for the modern retail investor.

But I do agree with Larry in that stocks may not always beat bonds, at least over short or modest investing periods. I have participated in a bit of a “lost decade” in my own DIY investing past.

It could happen again.

Looking back at a broad measure of the U.S. stock market, such as the S&P 500 index, over the past 20 years, you would see (or experience as an investor) very different results from the first decade (2000-2009) and the second (2010–2019).

In fact, for large-cap U.S. stocks in particular, this “lost decade” from January 2000 through December 2009 resulted in very disappointing returns: an index that had historically averaged more than 10% annualized returns before 2000, instead delivered less-than-average returns from the start of the decade to the end. Annualized returns for the S&P 500 (CAD) during the market period were -3.18%.


Of course, we only know the results of stocks in hindsight after bad market periods are over and preferably for me, a few generations back makes sense to measure some relative stock market history vs. going back to horses and buggies in the form of a few hundred years…

What do I think? Is 100% equities investing at your peril?


I remain invested in mostly equities at the time of this post with conviction although I do keep cash (or more recently cash equivalents on hand) and always have to some degree.

Instead of worrying about stock-market corrections, how long any stock-market correction might last, I’m more inclinded to worry about some things within my control and influence:

  1. My sustained savings rate for investing in equities (as I keep some cash on-hand).
  2. The ability to remain with my hybrid investing plan of stocks and low-cost ETFs.
  3. Keeping said cash on hand to pounce when more equity opportunities avail, and
  4. Avoiding fearmongering market news.

I align more with Larry Bates vs. Larry Swedroe on this one:

“I see the stock market, as a tool, for average people/average investors to be long-term business owners.” – Larry Bates, Beat the Bank.

So, I believe:

  1. a 100% equity investment portfolio can make great sense for younger investors, decades away from retirement, while,
  2. keeping 100% of your portfolio in equities as you enter retirement or remain in retirement could introduce unnecessary risk.

Any sensible investment plan must be tailored to the investor’s tolerance for risk (including losses) including the need for any equity drawdowns. When it comes to our personal portfolio, we remain invested in mostly equities while keeping some cash and we’ll continue to invest this way moving forward.

What’s your take on investing risk for reward?

How much cash or fixed income do you keep?

Have you changed your asset mix of stocks and bonds and cash as you have aged, why or why not?

Mark Seed is a passionate DIY investor who lives in Ottawa.  He invests in Canadian and U.S. dividend paying stocks and low-cost Exchange Traded Funds on his quest to own a $1 million portfolio for an early retirement. You can follow Mark’s insights and perspectives on investing, and much more, by visiting My Own Advisor. This blog originally appeared on his site on April 13, 2024 and is republished on the Hub with his permission.

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