Up and to the right. Relentlessly. Long term.
This happens because of human ingenuity. Ever since the invention of the wheel, humans have been creating better products and services to sell to the world.
With the new cars still getting the same gas mileage as Ford's 1914 Model T and clunky, self-checkout machines that never, ever work at our stores, I think we have a long, long way to go.
Looking at the chart with a short term view though, there are most definitely dips in the market.
Those dips come with real, intense problems, but they are natural cycles.
I just have to be tough enough to stomach the ride. When the market dips, or even tanks, the last thing I should think of doing is "selling off" my investments.
I have positive cash flow coming in each month from a job and have a 6+ month emergency fund stashed away in a savings account. There is fundamentally no reason for me to even consider selling.
As an investor in the wealth accumulation phase of life, when the market tanks, I should be lighting off fireworks with excitement.
Stocks just went on sale, and I should take that dip to purchasing as many shares as possible (buy low!). Think, would you rather buy 100 bikes at $1,000 a piece or 100 bikes at $500?
During those down turns, my net worth may drop by 20-+30%. But will the number of shares I own decrease? Nope. The number of shares I have, no matter what happens in the market, stays the same.
If the market dips I put on my tough cupcake hat and buy more stock because I know the stock market will continue its long term trek upwards. Maybe I celebrate because I'm getting stock on sale.
What type of funds do this? Index funds. The ones that do it best are the ones with the lowest expense ratio, like Vanguard's VTSAX (or VTSMX if you don't have $10,000 to invest just yet).
I could try to pick hot stocks, but if I did this I'd end up on the negative expectancy side of the investing equation. And so, I have no reason at all to do this.