Lesson From the Crash of 1987: Buy-and-Hold Investing Works

Had you bought into the stock market immediately before Black Monday, you'd still have earned nearly 9% a year along the way.

Who says buy and hold investing is dead?

With today being the 25th anniversary of Black Monday -- the day the Dow Jones industrial average fell 508 points, or 22.6% (the equivalent of a 3,000-point drop today) -- I wondered how well (or badly) you would have done if you had bought stocks on the Friday before the crash and held them over all these years. So I checked the return for Vanguard 500 Index (symbol VFINX), an index fund that tracks the U.S. stock market, from Friday, October 16, 1987, through October 18, 2012.

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Manuel Schiffres
Executive Editor, Kiplinger's Personal Finance