THE NEW RULES OF RETIREMENT SAVING • 79
What’s the Worst That Can Happen? I know indexing is powerful, but my daughter, Rebecca, wanted more proof. So I asked her a simple question: What is the scariest economic period in U.S. history? I bet her answer is the same one you’re thinking of now: the Great Depression. We’ve all heard tales of the wild market swings that took place throughout the 1930s. It was a truly unprecedented time. So I wanted to show Rebecca how the Great Depression would have turned out for someone in an IUL policy. How would this strategy fare in one of the most turbulent economies our country has ever known? First, let’s look at what the stock market did during the Great Depression and the ensuing recovery. Today, the S&P 500®, that measurement we’ve discussed of the 500 largest stocks, is the standard-bearer for how we measure a market’s strength or weakness. Of course, in 1929, analysts didn’t measure the top 500 stocks. Thankfully, academics have gone back and calculated how the top 500 stocks in the market performed in the 1920s and 30s. Here’s how those stocks performed:
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