Lucky 13-Year Investment Returns – ValueWalk Premium

Lucky 13-Year Investment Returns

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Q3 2021 hedge fund letters, conferences and more

U.S. stocks have performed extremely well in the past 13 years, but bonds have not. Stock performance is in the top decile of all 13-year periods over the past 96 years. Quantitative easing (QE) has been the driver. What will happen when QE ends?

It’s official. The return in the 13 years following the 2008 stock market crash has been terrific. In this article I examine the history of 13-year returns on stocks and bonds to put the most recent 13-year period into perspective. It has indeed been extraordinary.

A Phenomenal Recovery

Aside from a quick down blip in the first quarter of 2020, since 2008 the U.S. stock market, as measured by the S&P 500, has skyrocketed, growing approximately 600% when dividends are included. In addition to the steepness of this recovery, it’s the longest recovery on record if you don’t view the 2020 blip as ending the recovery.

Investment Returns

It should feel to most investors like this past 13 years is the best ever. It almost was. The following section examines all 85 13-year time periods ending in December.

13-Year Investment Return History

The following exhibit shows all the 13-year returns for stocks. The U.S. stock market, as measured by the S&P 500, returned 600% in the 13 years ending December 2021 (far right bar in the exhibit), which is 16% per year. It ranks nin5h out of 84 13-year periods, so top decile.

The greatest 13-year return was 863%, earned in the 13 years ending December of 1955, averaging 19% per year.

As you can see in the last two bars on the right, moving from 2020 to 2021 replaces 2008’s 37% loss with 2021’s 30% gain, propelling the 13-year return upward.

Returns averaged 323% (12% annualized) over the full history, so the recent return is 185% of average.

Investment Returns

Read the full article here by Ron Surz, Advisor Perspectives


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