CHICAGO, IL (Feb. 17, 1998) -- In 1936, deep in the throes of the Great Depression, Franklin Roosevelt said, "There is a mysterious cycle in human events. To some generations much is given. Of other generations, much is expected."

How true his words would become for his generation wouldn't be known for another two decades, after World War II took the lives of millions and after the Cold War placed the United States in a constant search for security. For investors, the stock market didn't return to its 1929 peak until 1954, twenty-five years later. For nearly three decades there was zero capital appreciation on the stock market.

Economic cycles
Roosevelt's thoughts about "cycles" are accurate by more than a few measures. Economists would argue -- even Foolish economists -- that cycles dictate nearly everything in business. Momentum builds in one direction for years until it finally slows and another "cycle" of economic growth (or lack of it) takes hold, swinging the pendulum in the opposite direction. Stocks follow the cycles that are inflation, earnings growth, interest rates, and world events -- all of which intertwine.

The current cycle began with high interest rates and high inflation in the seventies, and over the years those numbers have sunk to become the lowest inflation and interest rates that America has seen in decades. At the same time, democracy has emerged around the world, the U.S. has won the Cold War, and the U.S. stock market has had an amazing run over the last twenty years. The popularity of stocks -- as seen by all the new investment books, most frequented websites, television shows, etc. -- might very well be at an all-time high. In fact, more Americans than ever own equities. The future of Cisco Systems (Nasdaq: CSCO) and AOL Time Warner (NYSE: AOL) is interesting dinner conversation to millions of people.

"Buy and hold" doesn't always work
Compared to the Great Depression, our times right now might be called the Great Regression. How so? This might be a Great Regression to the common thought that is: Everyone should just buy and hold stocks. "Buy and hold" has become the overwhelming mantra. Yes, this approach is best if you have ten years or longer and if you know how to choose the right companies, but to hear the phrase so frequently repeated in the media -- "Just buy and hold!" said with a confident smile -- makes a person wonder how much longer the market can keep rising in the near term.

The good times can't continue indefinitely.

Last week a friend in the office said, "Will it all end badly?" The question was asked because over the past three years nearly every stock that he bought simply rose. And kept rising. It couldn't be natural -- or right. We agreed in the end that it wouldn't all end badly, but that it certainly couldn't continue like this indefinitely. Over the coming decades there will be down years, of course, and maybe even a very bad five- or ten-year period.

But no, the market won't perform horribly simply because it has performed so well for the past twenty years. The market has no memory and no idea how it has performed, nor does that matter. Stocks move with the economy and on earnings growth. If both continue to be favorable for an eternity, the market would very gladly continue to grow indefinitely, for an eternity. There is no seesaw to correct -- "Oh, we've been up in the air for so long, we need to come down." No.

But there are cycles. Economies expand for decades and then finally slow or contract for a time. And stocks go with them. There are cycles that affect entire generations. The cycles are larger than anyone could manage or ever predict, and they usually happen for the least suspected of reasons. (After World War I, the last thing that people expected in the coming decade was the start of the Great Depression.)

Have reasonable expectations
What do Fools do about this? There is not much to do -- you can't live in fear of a coming economic slowdown, never knowing when it will arrive -- but don't invest with great expectations for five years from now, or even ten years. Since 1950, the average bear market has lasted eight to twelve months and lowered the market by 28%, but more important is how long it then took for stocks to recover. Just two decades ago, it took nearly ten years for stocks to reach a previous high mark. After all, the typical economic cycle (up or down) has lasted for at least seven years. (This is part of the reason that the Drip Port, with a 20-year goal, is aiming to be especially diligent with the buy decisions that it locks into.)

Invest with the expectation that two decades from now (not just five years), you will be much better off monetarily than you are now, no matter at what level you're starting from. Invest and enjoy the long, slow, life-long process. And if you don't want to invest all of your life savings in the market right now, all at once, then don't. Invest in whatever way makes you most comfortable.

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Back in the present, no matter what your investment goals are, if you own or are interested in owning individual stocks, you may want to check out The Motley Fool's latest online seminar on evaluating companies. Among other things, the seminar will cover valuation basics, deciphering financial statements, and identifying times to buy, sell, and hold. Put simply, it will help you find the highest quality companies in the most attractive industries -- and it will be a lot of fun, too.

Finally, America Online flexed its pricing power muscle yesterday, announcing that it will raise its monthly subscription fee by $1.95. Rex Moore covered the story for Fool News.

Jeff Fischer owns shares of AOL Time Warner. To see all his holdings, check out his profile. The Motley Fool is investors writing for investors.