October 14th, 2009 
When it comes to the stock market, context is everything.
There’s no way to really know the meaning of the investment mantra “stocks for the long run,” for example, unless you know how long the long run can really be.
And how long can it be?
LONG.
Japan’s stock market is now trading at the same level it was trading at in the early 1970s (after adjusting for inflation). Investors who place money to work in Japan in 1973 are still waiting for a return. 40 years generally qualifies as “long.”
An analyst named Doug Small (dshort.com) has place together an incredible series of market charts that illustrate this and other context.
I’ve assembled some of my favorites in this slideshow on Business Insider.
As always, it’s hard to draw definitive conclusions about the future by dissecting the past–or by doing anything else, for that matter. But if there’s one overriding message from Doug’s work, it is this:
* Long-term stock returns from today’s level are likely to be lower than the long-term average (prices are high, dividends are low). What does “lower” mean? Probably in the 4 range, after adjusting for inflation. This compares to the 7% that everyone always talks about.
* The market is likely to grind along sideways for years.
