While stocks have the strongest historical returns, many Americans still reeling from the 2008 financial crisis remain afraid of investing their retirement savings in the stock market. This information sheet plots historical S&P 500 data going back to 1926 to show how returns behave over time shows that over a 30-year period, there has never been a time when cash or bonds have outperformed stocks.

Over very short time periods, stocks’ direction can be highly unpredictable. Historically, stocks have been positive on a daily basis 53.0% of the time—little better than a coin flip. However, history also shows the longer the holding period, the greater the likelihood stocks have positive returns.

Exhibit 1: S&P 500 Returns*

  Number of Periods Percent of Periods
  Positive Negative Total Positive Negative
Daily Returns 12,343 10,916 23,259 53.1% 46.9%
Calendar Month Returns 693 411 1,104 62.8% 37.2%
Calendar Quarter Returns 253 115 368 68.8% 31.3%
Calendar Year Returns 68 24 92 73.9% 26.1%
Rolling 1 Year Returns, Monthly 816 277 1,093 74.7% 25.3%
Rolling 5 Year Returns, Monthly 914 130 1,044 87.5% 12.5%
Rolling 10 Year Returns, Monthly 926 58 984 94.1% 5.9%
Rolling 20 Year Returns, Monthly 864 0 864 100.0% 0.0%
Rolling 25 Year Returns, Monthly 804 0 804 100.0% 0.0%

Exhibit 2: The Historical Frequency of Positive S&P 500 Returns**

hist-freq-pos-stock.png

Source: Global Financial Data, Inc. as of 12/31/2017.

* Exhibit 1 uses historical S&P 500 returns over various periods. Daily return data begin on 01/31/1928, and are based on price appreciation only; all other data begin on 01/31/1926 and reflect total returns.

** Exhibit 2 plots the percent of positive S&P 500 rolling periods (from 0-20 years) showing longer timeframes significantly increase the frequency of positive stock market returns. Calculated using monthly rolling holding periods from 01/31/1926 – 12/31/2017.

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