STREET DOGS: Long term
Why zero growth or a 30% decline in the S&P over the next 5 years wouldn’t be so bad for true long-term investors
From Ben Carlson at A Wealth of Common Sense: From 1928-2017, the S&P 500 showed an annualised average return of roughly 9.6% a year. From 2009 to 2017, the S&P 500 showed an annualised average return of roughly 15.1% a year. One of these data points is unsustainable (okay maybe both). The S&P 500 index would have to go nowhere for the next five years to bring the 2009 returns into alignment with the long-term averages. So if the S&P saw 0% total returns beginning at the start of 2018, the 14-year annualised return number from 2009-22 would be 9.5%, right around that really long-term average number. Of course, there’s nothing that says these long-term averages are written in stone or that we have to get back to those averages within a certain time frame. I’m simply trying to show how powerful this bull market has been. To take things a step further, looking at the rolling five-year total returns on the S&P 500 going back to the 1920s: Since the Second World War, the worst five-year ...
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