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Any investor who has not been 100% invested in the stock market since March 9, 2009 has missed out on some amount of stock market returns. However, everyone knows very few people should ever be 100% invested in the stock market. Therefore, we are going to miss out on some amount of returns during any period where the stock market outperforms other investment areas. Whether it’s the U.S. stock market or something else, there will always be an investment that outperforms what we own – this is an important concept for investors to grasp. If the risk of an investment or asset class is too high, then we shouldn’t own it in full. It’s that simple.

However, although stocks have rallied considerably since 2009, historically they’ve also been really good about aggressively falling back to or below the starting points of rallies, especially on an inflation-adjusted basis.

For example, the last stock market crash, which bottomed out in March of 2009, reached a level first achieved in January of 1997, wiping out over 12 years of stock market growth. On an inflation-adjusted basis, it wiped out nearly 14 years of growth.

But that’s not the worst; not by far. When the stock market bottomed out in December of 1974, it wiped out over 13 years of growth. However, on an inflation-adjusted basis, it bottomed out in July of 1982 and wiped out 81 YEARS OF STOCK MARKET GROWTH.

So even if you feel like not fully participating in the stock market has reduced your returns, the potential for a crash leading to a multi-decade loss of value is higher now than it’s ever been, and taking less risk over this bull market could lead to a very important preservation of capital when the market does finally turn aggressively lower.