The best-selling book Dow 36,000 was published on September 20, 1999 . The book made the case that stocks had been undervalued for decades and that, for the next few years, investors could expect a dramatic one-time upward adjustment in stock prices. That day, the Dow closed at a precise 10,823.90.
On November 24th 2006, the Dow closed at 12,280.17, for an appreciation of 1446.27 points or 13.4% in seven years. Almost every asset class outperformed the Dow. The massive stock market appreciation prediction however was fullfiled, just not in the United States.
The Bovespa (Brazil's stock market - ticker ^BVSP) was hovering at around 10,000 at the end of 2002. On November 24th 2006, while the Dow still traded in the low 12,000s, the Bovespa closed at 41,757.72, for an appreciation of over 400%. I suggest that this example of Emerging market appreciation was largely possible by the exposure of more thinly traded markets to a host of new instruments, mainly ADRs and ETFs.
A US-traded Brazilian ADR, UBB, may serve as a good example. In 1998 UBB traded at the $6 level, only to come roaring back in the early 2000s to the mid-30s range. The next low wasn't far however, and in late 2002 UBB was again back to the $6 level.
Current upward momentum has lifted UBB to over $80. I will let you calculate the ROI, if you had bought UBB at about $6 in 2002, and sold at the recent 52-week high 0f $90...
I will however compare the $707,782 Volume to a Developed-market stalwart: Citigroup's Volume in contrast is 14,781,900. Citi's P/E is 10.67, while UBB's exhibits a relatively rich 33.97. Conversely, Citi's appreciation over the last 5 years took the stock from around $30 to the current $50 level, versus the already covered UBB's appreciation.
I suggest that high voltaility may continue to be expected from relatively thin Volume, accentuated by the emergence of global capital instruments (and their need to capture alpha).
In summary, if you can pick the right point in the cycle, go ahead, buy low and sell very, very high.... If you can't, well... I will let you decide... but you may want to consider the less volatile shores of the S&P.