Returns After Market Peaks    (Updated 7/30/06) I have been re-reading Stocks for the Long Run (second edition) by Jeremy Siegel. It is one of my favorite investment books. Through this book, Siegel makes a strong case for a person to choose stocks over safer investments to grow your money over the long-term. Perhaps the best illustration of this is the following chart. It shows the thirty-year real (adjusted for inflation) returns of stocks, bonds and T-bills following market peaks. The chart above shows the result of $100 invested at August 1929, January 1966 and the average of the peaks of 1901, 1906, 1915, 1929, 1937 and 1966 and held for thirty years. I have created another chart that shows the nominal (not adjusted for inflation) annualized total returns of each thirty year period from 1926 through 1976. I used the data from a spreadsheet I created. These charts clearly show that stocks would be the best choice to grow your money over the long-term. I recommend choosing a diversified collection of low-cost index funds (as used for ‘slice and dice’). Some investors might choose the individual stock route. I would caution against that approach. Not only is stock picking a difficult task. But to consistently buy winning stocks and sell losing stocks over many, many years would be a major undertaking. Something even the professionals have trouble doing with success over long periods.