Historical Performance – Stock Market Returns

Whether you are looking at the stock market as a whole, Dow Jones Today (djia), the S&P 500 or any other number of “equity based” investments, you will find a great disparity between the results you will get.

Here is what I can tell you.  The general consensus for the general public is wrong.  That is, most people have been told that the over all return of the market has done 8% to 10% since the Great Depression.  And you know what, as it turns out the market has done pretty close to that over the last 91 year. (1932) The actual number is 7.65% when measuring the S&P 500.

But unless you have 91 retirement years left in your future, I would suggest that you look at a more current history of what the market may actually do during your retirement years.

Let’s look at the last 22 years.  If you go back to January 1, 2000 and calculate the market return to date, (3/2023) you will find that the market has done 4.91% when measuring the growth of the S&P 500.  Almost half of what the general public thinks.

For sure, there have been time that the stock market has earned 20% or better.  Generally, however, those number only occur following a market correction.  In other words, you may earn 20% one year only because you lost 30% in the years preceding that kind of return.  Sounds like your still down about 10% over all.  What do you say?

Another thing I can tell you is it is dangerous to look at percentages when measuring performance in the market.  And here is why.  The difference between Average Returns and Actual Returns.  What do I mean?

You have to use actual numbers. (Dollars and cents)

Let do that.  Say you invested $10,000 the first year and earned 50%.  You end the cycle with $15,000.  No too shabby.

Now let’s say you lost 50% in the second year.  That would be and average return of 0%. (zero)  But if you do the math, you will soon see that you only have $7,500 in your account.  That would be an Actual Return of -25%. 

So you earn +50% one year, lose -50% in the second and wind up a net looser of -25%.

And the same thing happens with most market investments.  You have to “net out” the loses.

Now I’m not a investment advisor. I’m just an insurance agent with almost 50 years of experience.  But I do market retirement investments.  But not investments in the stock market.  Why?  Because I believe there is a better way for the retirement saver to invest retirement money.  How about this?

What if there was a way to lock in your gains and protect them from ever losing money?  Would that be something to you might want to learn more about?  Well, I wrote a book about this and you can download a free copy here on this website.  My suggestion?  Download your free copy now.  Then read it.  It is only 19 pages long. Most can read it in less than 30 minutes.  And I’ll promise you, it is well worth your time.  See what you think.

Leave a Reply