Dean Cross

Home The Investing Strategy Series

Crashes, Recessions and Recoveries

What 155 Years of Stock Market Returns Really Show — 34 Popular Beliefs Tested

Everyone has a rule for market cycles. Few have checked it. This book tested 34 of them on 155 years of stock market returns — and shows which ones held up.

For the dividend rules tested the same way, see Pick Dividend Stocks That Keep Paying, also in the Investing Strategy Series.

If you invest for the long run, you have heard the rules:

  • The market always comes back.
  • Bear markets last about a year.
  • Stocks return about 10% a year.
  • An inverted yield curve means a recession is coming.
  • Don't fight the Fed.
  • Buy when there's blood in the streets.
  • Wait for a pullback before you invest.
  • Hold for 15 years and you can't lose.

Each one sounds sensible, and each one comes with a good story. Crashes, Recessions and Recoveries does something different: it tests every belief on the full record — every bear market and every recession since 1871 — with a pass mark written down before the data was checked, and gives each one a plain verdict: Supported; Supported, with a limit; Not supported; Contradicted; or Too few cases to judge.

The answer is steadying news for a patient investor. Every U.S. bear market since 1871 came back, with dividends and after inflation. The beliefs that held up are mostly the ones that help you stay invested, and the ones that failed are mostly the ones that promise you can time the turns.

Inside, you will learn:

  • How often bear markets have come, how long they lasted, and how long the market took to get back — with dividends and after inflation
  • Why the market has usually bottomed before the recession ended, and what that means for reading the news
  • What an inverted yield curve, a rate cut, rising unemployment and a housing slump really told investors
  • What happened to investors in past banking and debt crises
  • Whether a high CAPE predicts poor returns, and why selling on it still cost investors dearly
  • Which signs marked market tops and bottoms, and which didn't
  • When bonds, gold and cash protected you, and when they didn't
  • Invest now or wait? The record on waiting for a dip, and on a lump sum against monthly investing
  • Whether holding stocks for 15 years really means you never lose

Every chapter states the belief, turns it into a claim that can be checked, tests it, and ends with what the result means for you. A closing chapter brings every result together, with five questions to ask of your own plan.

Tested, not forecast. There are no predictions, no ticker picks and no promised returns. The data comes from long-run sources investors and economists rely on, including Robert Shiller's market record, the Federal Reserve, the National Bureau of Economic Research and the Kenneth R. French Data Library. Every test is described in the back of the book, and the full results are printed there for anyone who wants to check them.

The paperback and Kindle editions are printed in full color, with 13 charts and color-coded verdicts. The hardcover is printed in black and white.

Written for long-term investors who want to hold steady through the next bear market and stop paying for forecasts history can't support. No background beyond the basics is needed.

Part of The Investing Strategy Series, alongside Pick Dividend Stocks That Keep Paying — in the same plain voice, one tested belief at a time.

Know which beliefs the record supports, before the next bear market tests yours.

Look inside

A few pages from the paperback. Select a page to see it full size.

  • The contents
  • How each belief is tested and judged
  • The opening of Chapter 1
  • Figure 1.1: one full cycle, 2007 to 2013

Where to go next

PaperbackKindleHardcover