The One Thing the Market (Almost) Never Does

Amid the seemingly endless volatility in the U.S. stock market, it may surprise you to know that we have a pretty good idea of what the returns will be from it. Now before you declare us out of our minds (there’s lots of other better evidence for that), notice that we carefully omitted any mention of a time frame in the previous sentence.

But the truth is, we have a pretty good idea of what will happen over the next 30 years or so. We have a long data history that tells us that the S&P 500 averages between 9-10% annually, a return that includes dividends.

S&P 500 Total Returns from 1926-2021The disconnect stems from the surprisingly high volatility of the annual returns. We put together a histogram of the last 96 years of annual returns, bunching them into percentile ranges. You might expect something that looks like a bell curve, but you would be very wrong.

As the graph shows, the S&P 500 had a return between 8-12% only six times in the past 96 years, with the highest cluster of returns being over 20%! In fact, if you made the seemingly surprising prediction every January 1st that the market would either have a negative return or would be up over 20% in the following year, you would have been right over two thirds of the time. And it seems like 2022 might be yet another correct forecast, though on the negative side.

As advisors, we constantly remind clients about the necessity to think long term. The problem is that it’s hard at any age to think in 30-year terms, especially in the middle of a year like 2022.

It’s a small irony that during the past two years and five months we have endured a global pandemic, massive supply chain problems, inflation spiking, and now, war in Ukraine. During that period, the market went up 18.4% in 2020, up 28.7% in 2021, and down 17% year-to-date in 2022. As Seinfeld character Jackie Chiles would say, “Speculation, Frustration, Exasperation!”

And during that admittedly short time frame from 2020 to today, the annualized return is…10%.


Wealthspire Advisors LLC is a registered investment adviser and subsidiary company of NFP Corp.
Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the certification marks CFP®, Certified Financial Planner™, and CFP® (with plaque design) in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.
Index return data was sourced from SlickCharts ( and is valid thru 12/31/2021.
Past performance is not a guarantee of future returns. The S&P 500 index Launch Date was Mar 04, 1957. Information presented for an index prior to its Launch Date is hypothetical back-tested performance, not actual performance, based on the index methodology in effect on the Launch Date. Back-tested performance reflects application of an index methodology and selection of index constituents with the benefit of hindsight and knowledge of factors that may have positively affected its performance, cannot account for all financial risk that may affect results, and may be considered to reflect survivor/look ahead bias. Actual returns may differ significantly from, and be lower than, back-tested returns.  Index returns shown do not represent the results of actual trading of investable assets/securities, and differences can occur due to factors such as timing of initial investment, client restrictions, cash movement, etc. Index returns do not reflect payment of any sales charges or fees an investor may pay to purchase the securities underlying the Index or investment funds that are intended to track the performance of the Index. The imposition of these fees and charges would cause actual and back-tested performance of the securities/fund to be lower than the Index performance shown.
This information should not be construed as a recommendation, offer to sell, or solicitation of an offer to buy a particular security or investment strategy. The commentary provided is for informational purposes only and should not be relied upon for accounting, legal, or tax advice. While the information is deemed reliable, Wealthspire Advisors cannot guarantee its accuracy, completeness, or suitability for any purpose, and makes no warranties with regard to the results to be obtained from its use. © 2024 Wealthspire Advisors
Emily Platt

About Emily Platt, CFP®

Emily is a member of the investment team and works in our Potomac, Maryland office.

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About Wealthspire Advisors

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