The advice to buy and hold index funds over the long term is pretty common. Charts depicting the growth of the stock market over decades can be pretty compelling. Here’s a compelling chart (from the always-a-great-read The Big Picture):
Once you adjust for inflation, you can see that the Dow Joines Industrials Average did not go anywhere in real terms from 1929 to 1995. When people talk about bear markets and bull markets, they don’t talk about secular bear and bull markets often enough. We are in a secular bear market right now, which means that the stock market is going to continue to return basically nothing for the next several years and, even worse, inflation is likely to get worse and cause some serious losses.
Take a look at the section of the chart from the 1970s. If you bought and held stocks during the ‘70s you would have lost a ton of money in real terms, due to inflation.