Who Wins?



Total After 4 Years

Total After 4 Years

The basic idea is a mathematical one:

A steady positive sequence of returns may be more important than a higher more volatile sequence of returns.

Growth comes from the absence of significant loss. 

The table of hypothetical returns above illustrates the possible impact of even one down year of a portfolio.

Hypothetical Example 4 year Returns with an Initial Investment of $1,000,000.

What weighs more, losses or gains?

from a mathematical standpoint, steeper declines are more difficult to overcome.

The Lost Decade

If you invested in the S&P 500 in January of 2000, what would be your rate of return (ROR) at the end of the decade?

Lost Decade Graph.PNG

Ended just about the same place we started.



Bear Markets Graph.PNG

How rare are market meltdowns?

6 times


The above graph shows calendar year returns for the S&P 500 Index since 1926. The shaded band marks the historical average annual return of 10%, plus or minus 2 percentage points. The S&P 500 had a return within this range in only six or the past 91 calendar years. In most years the index's return was outside of the range, often above or below by a wide margin, with no obvious pattern. For investors, this data highlights the importance of looking beyond average annual returns and being aware of the range of potential outcomes.