The Mystery of Annual Returns

Maybe it’s just me, but I love it when I see or hear something that can help you (the client/investor) to get a clearer perspective so that you can tune out the “noise” and worry less about money.  For example, if there was something that you could know (maybe again?) that reminded you how irrelevant it is to dwell on short-term returns with investments, would you want to know more about it?


I recently came across an article written by Doug Buchan, from our advisor community (full article is here if you want to read it).  He reviewed the last 92 years of market history and made an illuminating observation.

First, he points out (like we have many times before) that the “stock market” (S&P 500) has averaged 10%/year over the last 92 years.  You’ve probably heard that before.  It’s these next two questions, however, where it starts to get fun:

  • Question #1: out of all those years, how many times did the S&P 500 end a year with an average return between 8 and 10%?
  • Question #2: out of all those same years, how many times did the stock market have a return higher than 20%, or worse than negative 20%?


Waypoint Wealth Management

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Waypoint Wealth Management