Today, we would like to explore the question: how often might we realize the stock market’s long-term average return? What we’ll see is that there is a rocky road to realizing that return.
Annual Returns For S&P 500 Index (1974 – 2023)
In Chart 1, we have a series of returns from the S&P 500 Index from the period of 1974 to 2023. In this 50-year period, markets have rewarded investors with an average annual return of 12.66%. Annual returns within two percentage points of the long-term average occurred only three times. This shows us that investors infrequently experience that average.
In Chart 2, we see the message is the range of returns is quite different from the average. Highlighted in the bar chart, returns have been as low as -37% in 2008, to as high as 38% in 1995, with many instances in which returns are well in excess and below the average return.
In Chart 3, investors had to endure many negative years in order to realize the average return of 12.66%. In this period, the S&P 500 Index experienced 10 years of negative returns. The data tells us that volatility should be expected by all investors hoping to achieve the market’s long-term average return.
In summary,
These elements emphasize that while we may consider changing course due to burgeoning trends, or shifting perspectives, it’s important to recognize that volatility is part of the stock market experience. This understanding can help support adherence to the plan established with your advisor. We hope that you found this presentation informative, and thanks for reading.
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Schultz Collins Investment Counsel is a group comprised of investment professionals registered with Hightower Advisors, LLC, an SEC registered investment adviser. Some investment professionals may also be registered with Hightower Securities, LLC (member FINRA and SIPC). Advisory services are offered through Hightower Advisors, LLC. Securities are offered through Hightower Securities, LLC.
This is not an offer to buy or sell securities, nor should anything contained herein be construed as a recommendation or advice of any kind. Consult with an appropriately credentialed professional before making any financial, investment, tax or legal decision. No investment process is free of risk, and there is no guarantee that any investment process or investment opportunities will be profitable or suitable for all investors. Past performance is neither indicative nor a guarantee of future results. You cannot invest directly in an index.
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