HISTORICAL stock charts seem to show that it took more than 25 years
for the market to recover from the 1929 crash — a dismal statistic that
has been brought to investors’ attention many times in the current
But a careful analysis of the record shows that the
picture is more complex and, ultimately, far less daunting: An investor
who invested a lump sum in the average stock at the market’s 1929 high
would have been back to a break-even by late 1936 — less than four and
a half years after the mid-1932 market low.
How can this be? Three factors have obscured this truth from investors: deflation, dividends and the distinction between the Dow Jones industrial average and the overall stock market.