How Often Might We Experience the Market’s Long-Term Average?

By Schultz Collins Investment Counsel on June 26, 2024

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,

• Average returns happened infrequently, and investors should not expect to realize the average return year-in and year-out.
• Returns can come in a wide range and can even have many negative years.
• Investors will need to adopt a plan of patience and tolerance to have the opportunity to realize a market’s long-term average annual return.

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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Disclaimer: Schultz Collins 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. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is neither indicative nor a guarantee of future results. The investment opportunities referenced herein may not be suitable for all investors.

All data or other information referenced herein is from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other data or information contained in this presentation is provided as general market commentary and does not constitute investment advice. Schultz Collins and Hightower Advisors, LLC or any of its affiliates make no representations or warranties express or implied as to the accuracy or completeness of the information, or for statements or errors or omissions, or results obtained from the use of this information. Schultz Collins and Hightower Advisors, LLC assume no liability for any action made or taken in reliance on or relating in any way to this information. The information is provided as of the date referenced in the document. Such data and other information are subject to change without notice.

This document was created for informational purposes only; the opinions expressed herein are solely those of the author(s) and do not represent those of Hightower Advisors, LLC, or any of its affiliates.