There's a Chance

Below is the chance of gain for the S&P500 index versus the long US Treasury Bond since 1928 across holding periods.

Source: NYU Stern School of Business

For the S&P 500 index, there were 92 calendar year holding periods between 1928 and 2019 and 67 or 72.8% of them had positive total returns. As the holding period increases so does the chance of gain! There were 90 three year holding periods since 1928 and 75 or 83.3% of them were up. 1928-1943 was the only down 15 year holding period. 100% of 20 and greater holding periods were up. 

For the U. S. Treasury long bond, the chance of gain for any one year was over 80%! Long bonds, as defined by this Stern study, had 100% positive total returns for 10 years and out. I guess this is why bonds are considered safer than stocks.

Now that we know there is a chance of gain, what IS the gain? Below are the average holding period total returns since 1928. 

Wow, the average annual total return for nearly any holding period hardly varies at all! Both US stock and bond markets show higher returns the longer you hold them! While not shown here, the data for longer periods, since 1800 and beyond, show similar results. This is not obvious or true for all markets, especially those European markets destroyed by two World Wars. 

Since 1928, the 67 up years averaged an S&P 500 total return of 18.4% ! The 25 down years averaged a -15.3% loss. Thus, our bull markets. 

In summary, the stock market has a 70% or 30% chance of gain or loss for any given year. As Lloyd says: "there's a chance". 

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Disclaimer: Posts are for education only and not investment advice, may be subject to change without notice, and, while prepared with care, may be subject to omissions and errors.