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What Can History Tell Us?

What Can History Tell Us?

August 26, 2022

"History doesn't repeat itself, but it often rhymes" – Mark Twain


Stocks have compounded a desirable 9.5% annual growth rate since 1900. Though you cannot directly invest in the Dow or the S&P 500, the annual rate of return of 9.5% helps to focus your attention on the long-term.  

We all know that the stock market has gone up and down since 1950; the S&P 500 has risen 92% over ten years and 100% over a 15- and 20-year period. (LPL, 2022)

Staying invested is a tough decision we all must make based on our goals and objectives. We all need to consider when the funds will be required. If the funds are needed very soon, it may make sense to sit out when the markets start declining. If your time horizon is 15 or 20 years into the future, we can see that over those periods, the markets went up 100% of the time, from 1950 – 2021.

 Mark Twain said it best: “History doesn’t repeat itself, but it often rhymes.”

When we know our history, we can learn that we will experience market volatility because it is normal! On average, the S&P 500 experiences a 5% or more pullback at least three times annually. We see, on average, one 10% or more market correction per year. 

Knowing our history can also help us dig through the data to find that bear market recovery times vary, but most of them don't take too long. LPL Research looked at the back of some bear markets in our history and helped us determine that "On Average, bear markets without recessions recover loses in 10 months. Recessionary bear markets take an average of 27 months to recover loses." (LPL, 2022)

If you want to review your investments because you are concerned about the market returns, don't hesitate to contact our office to schedule a meeting at 702-982-2479.

Thank you for your continued trust and confidence.

David S Dixon CFP®

The S&P 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries and widely held by individuals and institutional investors.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Investing involves risk including loss of principal.