Historical 30 year stock market slumps -- 2 happened in the 1900's

by Glen Wallace

I've found on two occasions in the 1900's when adjusting for inflation, but not accounting for dividends, it took 30 years to recover just the principle in the stock market.  The first time was the peak in 1929 when a stock market investor who bought a theoretical index fund at the peak would've had to wait until 1959 to see the fund's value return.  The next such 30 year gap was from the peak in 1966, then a long slump until those 1966 values returned in 1996.  Yes, I didn't account for dividends and it is because of those historical three decade slumps that I really like dividends.  But also keep in mind that two of the bigger drivers of the current market pay absolutely no dividend and if they did it would be very small due to their very large PE ratio -- Amazon and Netflix.

I also think a potential parallel could be found between the current rise of Amazon and the pre-'29 crash rise of the Radio Corporation of America which also had a high PE (although not nearly as high as Amazon) and paid no dividends prior to the crash.  Additionally,  RCA was, like AMZN, a darling of the stock market that rose in a very similarly precipitous manner as AMZN and, prior to the '29 crash, everyone was gushing about RCA and its stock.   

https://finance.yahoo.com/news/dow-may-already-bear-market-185419194.html