April Returns and Asset Performance
May 2, 2022
May Returns and Asset Performance
June 3, 2022The Bumpy Road to Average Returns
Since 1926, the US stock market has rewarded investors with an average annual return of about 10%. But it’s important to remember that performance in any given year may be sky-high, extremely poor, or somewhere in between. For example:
- Annual returns came within two percentage points
of the market’s long-term average of 10% in only seven of the past 96 years. - Yearly returns have ranged as high as up 54% and
as low as down 43%. - Since 1926, performance has been positive 71 times and negative 25 times.
Sudden market downturns can be unsettling. Historically, US market performance following sharp downturns have, on average, been positive. For instance:
- A broad market index that tracks all shares on the NYSE, AMEX and NASDAQ since 1926 shows that stocks have tended to deliver positive returns over one-year, three-year, and five-year periods following steep market declines.
- Cumulative returns show this to striking effect. Five
years after market declines of 10%, 20%, and 30%, the compounded returns all top 50%.
Ultimately, capital preservation strategies are essential to managing risk. To this end, active risk mitigation seeks to reduce investor exposure to the severity and duration of any market drawdown. This is especially important for investors approaching retirement when investors’ time horizons are shorter. Have questions or concerns about your portfolio? Contact us for a complementary meeting here. Whatever is motivating you to reach out, we’re here to listen and help.
Past performance is no guarantee of future returns.
