I recently listened to a webcast and some of the numbers surprised me so I wanted to share them. You’ve likely heard us say that it’s critical to keep a long term perspective. Here is one way to illustrate this point.

Let’s start with stocks as represented by the S&P 500 (500 largest companies in the USA) from January 1976 through June 2022.

  • When looking at calendar year QUARTERS, this index was negative 27% of the time. This means that approximately 1 quarter / year has been negative since 1976.
  • When looking at ANNUAL returns, this index was negative 8 out of 46 years or 17% of the time.

Now, let’s look at bonds as represented by the Bloomberg US Aggregate Bond Index (high quality corporate and government USA bonds) from the same time period.

  • When looking at calendar year QUARTERS, this index was negative 23% of the time.
  • When looking at ANNUAL returns, this index was negative 4 out of 46 years or 9% of the time.

Finally, let’s blend stocks and bonds by allocating 50% to the S&P 500 and 50% to the Bloomberg US Aggregate Bond Index.

  • When looking at calendar year QUARTERS, this blend was negative 9% of the time.
  • When looking at ANNUAL returns, this blend was negative 6 out of 46 years or 13% of the time

Make sure you are allocated correctly, keep a long term perspective, and remember that negative returns do happen over time!

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