Some Historical Perspective on Recent U.S. Stock Returns

Some Historical Perspective on Recent U.S. Stock Returns

2019 was a fantastic year for U.S. stocks. The S&P 500 Index delivered a total return of 31.5% for the year. As the chart below demonstrates, last year’s return was nearly two and a half times the historical average (median) return observed over rolling one-year periods. Interestingly—and perhaps surprisingly to many—if we extend the observation horizon, to look at trailing returns over longer periods, we can see that the returns over the last three, five and 10 years, while better than average, haven’t been dramatically so. And, when looking at an even longer horizon, we can see that over the last 20 years, returns have been a full five percentage points per year less than average.

The chart below provides additional historical context by plotting recent returns against the entire range of historical observations. The chart shows that last year’s returns rank in the 84th percentile of all rolling one-year observations. Put differently, only 15% of rolling one-year periods over the last 94 years have seen the S&P 500 deliver better returns—2019 was a great year for the S&P 500! We can also see, once again, that the returns over the last three, five, and 10 years were all modestly, but not dramatically better than average as these returns ranked in the 67th, 54th, and 64th percentiles, respectively. In sharp contrast, we can see just how historically poor returns have been over the last 20 years, as returns fall in just the 6th percentile historically.


S&P 500 Index returns from Dimensional Fund Advisors

Important Disclosures

Kathmere Capital Management (Kathmere) is an investment adviser registered under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply any level of skill or training. The information presented in the material is general in nature and is not designed to address your investment objectives, financial situation or particular needs. Prior to making any investment decision, you should assess, or seek advice from a professional regarding whether any particular transaction is relevant or appropriate to your individual circumstances. This material is not intended to replace the advice of a qualified tax advisor, attorney, or accountant. Consultation with the appropriate professional should be done before any financial commitments regarding the issues related to the situation are made.

The opinions expressed herein are those of Kathmere and may not actually come to pass. This information is current as of the date of this material and is subject to change at any time, based on market and other conditions. Although taken from reliable sources, Kathmere cannot guarantee the accuracy of the information received from third parties.

An index is a portfolio of specific securities, the performance of which is often used as a benchmark in judging the relative performance to certain asset classes. Index performance used throughout is intended to illustrate historical market trends and performance. Indexes are managed and do not incur investment management fees. An investor is unable to invest in an index. Their performance does not reflect the expenses associated with the management of an actual portfolio. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. All investing involves risk including loss of principal. Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal, and potential liquidity of the investment in a falling market. Past performance is no guarantee of future results.

S&P 500: Standard & Poor’s (S&P) 500 Index. The S&P 500 Index is an unmanaged, capitalization-weighted index designed to measure the performance of the broad U.S. economy through changes in the aggregate market value of 500 stocks representing all major industries.

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