The idea that people should have to speculate in stocks to tread water, index fund or not, is absurd and historically abnormal. I also happen think that dumping money into a stock index fund will be a good way to lose over the next 10 years. It's been a really bad idea for many long historical periods.
It should be possible to buy CDs at a few points above inflation. This was the historical norm. People shouldn't have to "invest" at all to preserve and modestly grow the value of their earnings. The vast majority of people have no business owning stocks or bonds. The only reason you can't get a decent interest rate is the crazy monetary policy of the last 40 years.
Crazy? Seems like a smart move for shareholders to ask for a government policy that increases stock prices at the expense of other investment vehicles.
It's funny how most (all?) government policies result in a wealth transfer. If it's not directly buying goods and services from a corporation on behalf of the people, it's a policy to encourage the people to spend on one thing instead of another. There's nothing inherently wrong with that, but it's good to notice who stands to gain.
>It's been a really bad idea for many long historical periods.
Name a historical period of longer than 15 years in which the market as a whole has lost money relative to inflation. That didn't even happen across the Great Depression.
Furthermore, market history did not begin in 1910 in the United States. Stock markets go back hundreds of years in many countries. A global long-view perspective is worth a lot more than 90 years of US data. And from that perspective "stocks for the long haul" have very often been a bad idea.
Your chart shows a flat spot of 16 years across the 80s, and another one of about 25 years measured from the very peak of the market in 29.. So you're right, though that figure isn't impressively different.
The figure I was remembering was actually about a 60/40 balanced stock+bonds fund like VBINX, which is what I'd recommend to anyone anyway.
It should be possible to buy CDs at a few points above inflation. This was the historical norm. People shouldn't have to "invest" at all to preserve and modestly grow the value of their earnings. The vast majority of people have no business owning stocks or bonds. The only reason you can't get a decent interest rate is the crazy monetary policy of the last 40 years.