I decided to play with these numbers myself because I had some questions. I believe the data is the same as I found here[0]
The average single-year return over that period was about 7.5%, not 10%- though in half of years, the market did better than 11%. But what happens if we bucketize by a larger period, like 5-year? My method was to take $1, multiply by the return for 5 years in a row, and then take the 5th root of the result, then convert to a percentage return per year by 5-year bucket. Overlapping 5-year buckets.
The end result is as you'd expect. There are bad years, and there are good years, but the storm is pretty tame when smoothed out. In more than 75% of 5-year periods, the average return was positive. Only 69% of 1-year periods were positive.
As a fun aside, if you invested in an S&P500 index fund the day Clinton was elected and sold it all the day Bush was elected, you'd have made close to 25% annual return on average.
The linked data isn't adjusted, though - it's just raw open/close values for each year. The mistake here is ignoring dividends, which push returns up by 2-3% per year.
The average single-year return over that period was about 7.5%, not 10%- though in half of years, the market did better than 11%. But what happens if we bucketize by a larger period, like 5-year? My method was to take $1, multiply by the return for 5 years in a row, and then take the 5th root of the result, then convert to a percentage return per year by 5-year bucket. Overlapping 5-year buckets.
The end result is as you'd expect. There are bad years, and there are good years, but the storm is pretty tame when smoothed out. In more than 75% of 5-year periods, the average return was positive. Only 69% of 1-year periods were positive.
As a fun aside, if you invested in an S&P500 index fund the day Clinton was elected and sold it all the day Bush was elected, you'd have made close to 25% annual return on average.
[0]https://www.macrotrends.net/2526/sp-500-historical-annual-re...