Philips also warns against rules of thumb which say, for example, that after a lost decade of historical underperformance, the pendulum is due to swing back toward outperformance. "Mean reversion is a very dangerous game to play," he says. "Historical patterns look like they can be tracked and profited from. We tend to be a little cynical with respect to things like that. If it were that easy, a lot more people would be a lot more successful."
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Still, with bond yields at record lows and bond prices exposed to interest-rate and inflation risk, inevitably investors face the Henny Youngman question: Equities are risky compared to what?
"If you're a long-term investor—and here we agree with the takeaways of the Fidelity report—your best bet for realizing positive real returns—on average, over time—is going to be equities," says Philips. "They do a great job of mitigating the impact of inflation over longer periods and they should outperform more conservative investments—your money-market, your fixed-income investment—because they are riskier assets."
Even over the past decade, says Fox, investors using dollar-cost averaging have made money in stocks. Not much, but some.
"The lost decade is going into the rear-view mirror, you have made money in the stock market over last 10 years, and I think you'll have similar returns going forward," says Fox. "I don't think we're going back to the 1980s and '90s, where you made 17 or 18 percent a year. But there's nothing wrong with 8 percent a year for a decade. And compared to the alternatives, I think it's going to prove pretty good."