1. History Favors a Return to the Mean
History Shows Positive Returns Have Outweighed Negative Returns
Annual Returns of the S&P 500 Index – Positive vs. Negative
As you can see above, annual returns were positive approximately 70% of the time. Measuring returns over 10-year time periods, you see that results worked in investors’ favor 95% of the time.
The historical 10-year returns following the worst 10-year period returns since 1926 have benefited those who were invested in stocks. The decade ahead remains a question mark.
S&P 500 Index Worst 10-Year Returns and Subsequent 10-Year Returns10-Year Periods Ended December 31
The Bottom Line
- Investors shouldn’t use the most recent trend to extrapolate the future.
- Market history tells a story very favorable to long-term investors.
- Following a negative 10-year return, the subsequent historical 10-year return was positive.
- Speak with a financial advisor for help creating a long-term investment plan focused on long-term results.
Another reason to be an equity investor: The World is Getting Smaller (and More Prosperous)
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