Double digit returns are the norm for the stock market (S&P 500)

oracle · 4th Oct, 2018

Read interesting article about how the actual returns on yearly basis from S&P 500 differs from average annual return of 9.6%.

A wealth of commonsense said:

The S&P 500 returned 21.6 percent in 2017. So this also marked the seventh year out of the past nine that it has finished with a double-digit gain.
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A wealth of commonsense said:

Over the past 90 years, the S&P 500 has shown 66 calendar-year gains and 24 losses. This means stocks have advanced roughly three out of every four years. And in that time, the annualized return was 9.6 percent.
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A wealth of commonsense said:

Of those 66 positive annual gains, the average return was almost 21 percent. And 51 of those 66 years saw double-digit returns. In fact, the year finished with a gain in the range of 8 percent to 12 percent in just four of the past 90 years, less than 5 percent of the time. Stocks have finished the year with a gain in excess of 20 percent one-third of the time.
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A wealth of commonsense said:

A similar pattern appears when stocks fall. The average annual loss during down years was 14 percent. Of the 24 down years, 11 had double-digit drops. On six of those occasions, stocks fell 20 percent or more. When the up and down years are combined, we see that 70 percent of all calendar-year returns are double-digit gains or losses.
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A wealth of commonsense said:

The only problem for investors is that the average annual gain of 21 percent and the average annual loss of 14 percent offer a wide range to work with. When stocks are up, they tend to be up big, and when stocks are down, look out below.
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No wonder to invest in stocks you need to have a big appetite and tolerance to volatility. For 2017, the worst drawdown was less than 3 percent, which is the lowest it’s been since the mid-1990s. Don't expect markets to be calm in future. Volatility will come roaring back when you least expect it.

Full article here

Cheers,
Oracle.

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Double digit returns are the norm for the stock market (S&P 500)

oracle Well-Known Member

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Double digit returns are the norm for the stock market (S&P 500)

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