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Stock Returns Over Different Time Horizons

Updated: Dec 29, 2020

A look at the last 40 years.


As I write this, the S&P 500 is experiencing its 7th day out of the last 9 trading days in which it has moved 2% or more in either direction. Additionally, 6 of the last 9 days have experienced swings of 3% or more. I'm sure many of you have stumbled across dramatic headlines on news outlets such as "stocks plummet" or "stocks rally in record day" and it may seem like a different news story is moving the market each day (coronavirus, politics, etc.). When times such as these occur, many investors get nervous or feel like they need to take action and they ask "Should I sell? Should I buy more?". It can be helpful to take a step back and look at how stocks perform on average over different time periods. Below are data points showing what types of returns you could have experienced over different rolling time periods if you had invested in U.S. stocks (as represented by the S&P 500 Index) on any day over the last 40 years:

Daily Returns: 53% of days over the last 40 years had positive returns while 12% of days suffered negative returns of at least -1%.

Monthly Returns: 63% of one month periods had positive returns while 10% of months experienced declines of at least 5%.

12 Month Returns: 78% of 12 month periods had positive returns while 12% of those periods suffered declines of at least 10%.

36 Month Returns: 84% of 36 month periods had positive returns while 12% of the periods lost 10% or more.


60 Month Returns: 80% of 60 month periods had positive returns while 11% of the periods had negative returns of at least -10%.

120 Month Returns: 92% of 120 month periods had positive returns and 7% of the periods suffered declines of 10% or more.

240 Month Returns: 100% of 240 month periods had positive returns with the average return being 8.3% annualized over the time frame.


Ultimately, the longer your investing time horizon is, the more likely you are to experience positive returns. It is nearly impossible to predict when the next market crash will occur but it is highly likely that even if it begins tomorrow, your long term returns will still be positive. The best move you can make in times of heightened volatility and headline driven markets is to stick to your long term plan. Make sure you have an investment strategy that is devised to help you meet your financial goals and make sure it is one that you can stick with in times of falling markets.

The large daily moves and negative headlines will likely make you feel nervous, but don't let that nervousness alter your behavior. If you are consistently contributing to your retirement plan, continue doing so and continue investing according to plan. As young investors contributing to retirement plans, we have inherent advantages in having long time horizons coupled with consistent contributions. That long time horizon greatly increases our chances of long term positive returns and the consistent contributions allow us to buy and re-balance at lower prices after stocks have experienced sharp declines. Stick to the plan - chances are it may be just as good a time to invest as any other.

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