You may have heard the saying, often (mis-)attributed to Mark Twain, that history does not repeat, but sometimes it rhymes.

Well, I just saw a table of historical returns that shows how some historical rhyming will benefit our stock portfolios.

Let’s take a look…

This table comes from Charlie Bilello, founder and CEO of Compound Capital Advisors, via Twitter:

The Wilshire 5000 index covers basically all of the publicly traded U.S. stocks. The left side of the table shows that the first nine months of 2022 rates as one of the worst nine-month periods in stock market history.

The right side shows total returns after the nine-month declines. There is a lot of green, indicating positive returns on that table. I think the one-year column is the most revealing. In 18 of the previous 19 decline periods, the market was higher one year later, with an average gain of 12%.

The 28% gains from the “average of worst periods” show that the harder the market fell, the stronger the recovery. If you look at the numbers for the percentage drops similar to the 25.9% of 2022, you see that the 12-month recovery averaged pretty close to the amount of the decline.

These numbers mean the way to make money is to have a strategy to add shares during the downturn and recovery. That way, your wealth is much higher when share prices get back to pre-crash levels.

My Dividend Hunter strategy, which focuses on building a high-yield income stream, makes buying easier when share prices are down. You have regular dividends to reinvest, and if you can add more cash, each share you buy boosts your income stream.

While the focus always stays on growing your income, the strategy naturally builds your wealth when the market drops and recovers. To join in, see below.