Many investors are still fatigued from the 2008 global market crisis despite the ensuing strong market rally. To some extent, it seems many have accepted the often mentioned "new normal" scenario where equity returns are predicted to be lower in the future.

The reality is that this concept is not new at all. Market history reveals many periods of economic upheaval where investors believed that the best was behind and that future returns would be lower. What has been shown in all of these instances is that markets are extremely resilient and adapt to changing circumstances leading to new wealth creation.

Recently I had the opportunity to hear Professor Jeremy Siegel (author of Stocks for the Long Run) speak at a conference where he traced the inflation adjusted performance of stocks back to the early 19^th century. He concluded that over this 200 year timeframe stocks have produced about a 6.7% per year return above inflation. He says that markets overshoot on both the downside and upside but sees little reason to suspect risk premiums will be much different in the future than they were in the past.

The market slide of 2008 reversed in 2009-2010 and has now gained back essentially all of the lost ground. The bull market that started in March 2009 is now almost two years old but many investors still are sitting outside the stock market. What is imperative to understand is that earlier generations of investors also faced periods with similar concerns. Long term financial goals are accomplished by action, not reaction.

The chart attached shows the annual performance of the U.S. market (as defined by the Center for Research in Securities Pricing, University of Chicago). Since 1926 there have been only 4 periods where the stock market had two or more consecutive years of negative returns. The most obvious normal may be that, over time, stocks offer expected returns reflecting the uncertainty and risk that investors must bear. Not too much new about that.