Best and Worst 12-Year Investment Periods Throughout History

“Those who cannot remember the past are condemned to repeat it.”

With that in mind, let’s review the past so that we might catch a glimpse into the future.

The three best 12-year annualized forward returns for the S&P 500 (including dividends) going back to 1928 were:

  • 19.0% (1988-2000)
  • 18.3% (1950-1962)
  • 18.2% (1944-1956)

An annualized return of 19% implies a $100,000 portfolio grows to over $805,000 in twelve years!

The three worst 12-year annualized forward returns were:

  • -2.8% (1930-1942)
  • -2.4% (1929-1941)
  • 0.5% (2000-2012)

An annualized loss of 2.8% implies a $100,000 portfolio declines to about $71,000 in twelve years.

For context, the very long-term annualized return for the S&P 500 is around 10%. So we observe there is tremendous amount of volatility in even 12-year periods. Continue reading “Best and Worst 12-Year Investment Periods Throughout History”

2020 is the “Anti-1980”

2020 is the “Anti-1980” or as Seinfeld might say, the “Bizarro-1980.”

Baby Boomers and the Silent Generation enjoyed a wonderful investing era as they were hitting their career stride, and investing the bulk of their retirement savings, throughout the 1980s and 1990s. Contrast that to Millennials who may be hitting their stride now and starting to put decent money away. It’s really a stark contrast in the market environment between the two eras.

Below is a quick graphic comparing stock market valuations and total debt load within the U.S. economy between 1980 and 2020. The differences are obvious and significant. I’ll summarize below the graphic.

Continue reading “2020 is the “Anti-1980””

Signals Through the Noise

It’s no secret that I have been concerned about both (1) our proximity to the next bear market and (2) the potential severity of the decline in the next bear market.

A tricky thing about bear markets, however, is that we can be in one for a long time before we even realize it. That’s because bear markets can only be confirmed in hindsight only AFTER losses have become sufficiently severe. That doesn’t do the “reactive” investor any good because by the time it is known we are in a bear market (or a recession) it’s almost too late to do anything about it. The only way to avoid being reactive is to be proactive, which can only be accomplished if you understand history and are able to pick up on meaningful signals through all the noise. Continue reading “Signals Through the Noise”