Betting on a sure thing?

One thing that makes stock market investing different from other types of investments is the tremendous amount of historical data that is available. We have performance data going back nine decades. Analyzing this data can increase investor confidence in probable outcomes in the future.

U.S. Stocks

In the nine decades since 1928, the following facts can be observed…

• There has never been a 30-year stretch that didn’t produce a positive return.

• There has never been a 20-year stretch that didn’t produce a positive return.

• There has been only one 15-year stretch that failed to produce a positive return. It was during the Great Depression and the loss was -0.54%.

• 10-year investment periods produced a positive return 95% of the time. The return for the worst 10-year period was -5%.

• 5-year investment periods produced a positive return 89% of the time. The return for the worst 5-year period was -18%.

Note: All data was taken from Chad Gordon’s most excellent book, Wealth by Virtue.

International Stocks

The above data pertains to the US stock market (S&P 500). What about international stocks?

We only have 50 years of data on foreign stocks, but since 1970, the following facts can be observed...

• There has never been a 30-year stretch that didn’t produce a positive return.

• There has never been a 20-year stretch that didn’t produce a positive return.

• There has never been a 15-year stretch that didn’t produce a positive return.

• 10-year investment periods produced a positive return 99% of the time.

• 5-year investment periods produced a positive return 91% of the time.

Note: Data based on the MSCI World ex-US Index

As you can see, international stocks have a higher winning percentage than US stocks over 5, 10, and 15 year periods!

Patience and diversification are rewarded around the globe.