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There's no doubt that the stock market's 2008 collapse was a highly unusual "tail event." It's worth remembering that many clients started investing when market returns were unusually high. As you can see from the graph, just 10 years ago, the stock market was roaring. The five-year annualized total return for the S&P 500 was an astronomical 24.3%. The longer-term performance figures for the market were also quite impressive and well above historical averages. But now, as short- and long-term performance of the market set new lows, even ultralong-term horizons are poor. The current 10-year and 40-year annualized return for the market is three standard deviations below normal. Regression to the means suggest things should improve in the future, but in the short term can the tail wag further?
Click HERE to view the infographic.
