One of the most powerful forces behind long-term stock market growth has been innovation. Over the past century, breakthroughs in technology have transformed the way we live, work, and do business—creating new industries, improving productivity, and fueling corporate earnings.
The accompanying chart traces the stock market alongside major technological innovations dating back to 1928. From the widespread adoption of electricity and automobiles to the rise of computers, the internet, smartphones, cloud computing, and now artificial intelligence, each era of innovation has reshaped the economy in meaningful ways.
Yet the chart also highlights an important lesson for investors: innovation does not translate into immediate stock market gains.
Markets have experienced numerous setbacks along the way, including the Great Depression, World War II, the oil crises of the 1970s, the dot-com crash, the Global Financial Crisis, the COVID-19 pandemic, and other periods of uncertainty. Despite these disruptions, innovation continued in the background, laying the foundation for future economic expansion and market growth.
It's also worth remembering that many groundbreaking technologies require years—or even decades—to reach their full economic potential. Personal computers were introduced long before they became household essentials. The internet existed for years before transforming global commerce. Smartphones took time to revolutionize communication and business. Today's advances in artificial intelligence may follow a similar path, with the greatest benefits emerging gradually rather than overnight.
