{"id":13441,"date":"2022-10-02T17:07:55","date_gmt":"2022-10-02T23:07:55","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=13441"},"modified":"2022-10-02T17:07:55","modified_gmt":"2022-10-02T23:07:55","slug":"a-look-at-sp-500-annual-returns-its-getting-interesting","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=13441","title":{"rendered":"A look at SP 500 Annual Returns: It’s Getting Interesting"},"content":{"rendered":"

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This blog post<\/a> in late 2021 looks ok in the cold light of hindsight in 2022, but the important part of that www.fundamentalis.com blog post was the above table, for which a minute was taken this weekend to update the numbers. This blog post<\/a> from late January, ’22 was pretty good too.<\/p>\n

To quickly explain the math, the far left column is the starting data for the “annualized” or “annual” or “average, annual” return calculation, and I’ve seen the number referred to by all three monikers, but going forward, the “annual” return will be used to describe the above math.<\/p>\n

1.) The table (or dataset) above “Ycharts performance software” shows the annual return for the SP 500 over multiple timeframes, starting with the year 2000, and ending with the time period starting 1\/1\/2020, through 9\/30\/22;<\/p>\n

2.) The SP 500 Return and the numbers below are the calendar-year returns for 2019, 2020, 2021, which then shows the 26% “annual” 3-year return, and then the 9-month YTD return for the SP 500;<\/p>\n

3.) The last line starting “5\/1\/13” readers might find interesting: after the SP 500 peaked in March, 2000, at 1,550, there wasn’t a new all-time-high made consistently until early May, 2013. By consistently is meant the SP 500 didn’t drop back below 1,550 after the breakout in May, 2013;<\/p>\n

What’s the point of all this ?<\/p>\n

If readers look at the last column on the table, under 9\/30\/22, shows that except for the year 2000 and the 5-year return starting 1\/1\/2018, all longer-term returns still look elevated or “above-average” but as readers can see from the table, the returns are dropping sharply thanks to this years equity market.<\/p>\n

While clients are nervous, and getting antsy, the fact is a good October ’22 flush for the SP 500 might go a long way to bringing these longer-term returns back into a “normal” range. Looking back to 1970, the arithmetic average return for the SP 500 through 2021 is 12.5% annually, and the average SP 500 EPS growth rate since the mid-1980’s is 8% per year.<\/p>\n

Since I talk to clients about the post-2009 market returns, from 1\/1\/2010 to 9\/30\/2022, the “annual” return for the SP 500 is 11.78%, just below the longer-term average since 1970 of 12.5%.<\/p>\n

Another look at annual returns:\u00a0<\/strong><\/em><\/p>\n

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This table adds a number of other indices besides the SP 500 and then also looks at international index returns including emerging market ETF’s (EEM, VWO) and the Oakmark International Fund. (All return data courtesy of Morningstar.)<\/p>\n

Here’s what jumps out after looking at the data:<\/p>\n