You might think that wars have had a negative impact on the economy, but for the most part, the exact opposite is true. World War II was very costly in terms of human lives and government expenditures. But to gear up for the war actually produced a booming economy. The Korean War and the Persian Gulf War had similar effects, although there was a recession following the Gulf War in 1992.
On the other side, the Vietnam War and the War on Terror have had negative effects on the economy. The Vietnam War lasted for 16 years and the average return for the S & P500 during that time period was a small 3.91 percent. Also similarly was the return for the S & P500 from 2001 to 2007, a dismal 3.02 percent.
The dot-com bubble in the 1990s burst in 2000. Just like in the 1920s, investors believed that easy riches could have had in the stock market. Internet and technology stock prices soared to new heights until the bubble burst in March 2000 and the party was over. The dot-com bubble did not lead to a depression though but it did major damage to people's investments.
So how do you survive long periods of low market returns?
Maintain a diversified portfolio. If you have a diversified portfolio you can stay the course and let the market work things out.
Avoid the next hot investment. Resist the urge to invest in the latest new technology craze.
Do not depend on high investment returns for retirement.
Keep investing periodically through these difficult periods.
Include fixed income investments, like bonds and certificates of deposit in your portfolio.