“On a long enough timeline, the survival rate for everyone drops to zero.”
But in a less-morbid twist on that “Fight Club” quote, it’s safe to say that, on a long enough timeline, the win rate in the stock market reaches 100%.
“While it’s true that putting your money on the line is never easy,” Jeff Desjardins of the Visual Capitalist blog wrote in a post, “the historical record of the stock market is virtually irrefutable: U.S. markets have consistently performed over long holding periods, even going back to the 19th century.”
As proof, he pointed to this animation from The Measure of a Plan blog, which shows the performance of the U.S. market over different rolling time horizons using annualized returns going all the way back to 1872.
The data, adjusted for reinvestment of dividends as well as inflation, comes from the S&P Composite Index from 1872 to 1957, and then the S&P 500 index
from 1957 onward.
As you can clearly see, the longer the time frame, the less frequency that your market bet will become a loser. In fact, once the 20-year window is reached, all losses disappear completely. Yes, of course, past performance is no guarantee of future results, but still, you have to like your chances.
Here’s another way to look at the risk in short-term investing. Of note, 31% of the years over the past century and a half of data delivered negative returns:
“Long-term investors can see that as long as their time horizon is measured in the decades, you can take the odds of making money in the stock market to the bank,” Desjardins wrote.
Then again, hey, whatever happens, it’s just money, right? As “Fight Club’s” Tyler Durden said, “You are not the contents of your wallet.”
At last check, the Dow Jones Industrial Average
, bogged down by Boeing
, was in the red on Tuesday, while both the S&P and Nasdaq Composite