A Picture is Worth a Thousand Words

S.F. Ehrlich Associates |

June 30, 2020

As part of our efforts to provide financial advice to clients, we’re regularly reviewing the latest research on investments, planning, and many other topics related to a successful retirement.  Much of that research focuses on investors’ ability to stay on course with their asset allocation, through thick and thin.  We recently came across a couple of charts we felt did a good job of articulating the benefits of maintaining a long-term perspective when managing a portfolio. 

Per Dimensional1,2:


The Bumpy Road to the Market's Long-Term Average

“Since 1926, the US stock market rewarded investors with an average annual return of about 10%. But it’s important to remember that returns in any given year may be sky-high, extremely poor, or somewhere in between.

  • Annual returns came within two percentage points of the market’s long-term average of 10% in just six of the past 94 years.
  • Yearly returns have ranged as high as up 54% and as low as down 43%.
  • Since 1926, annual returns have been positive 69 times and negative 25 times.”


Long-Term Investors, Don't Let a Recession Faze You

“In the past century, there have been 15 recessions in the US. In 11 of those instances, stock returns were positive two years after the recession began.

  • Investors may be tempted to abandon equities and go to cash when there is heightened risk of an economic downturn.
  • But research has shown that stock prices incorporate expectations of a recession and generally have fallen in value before a recession even begins.
  • The average annualized return two years after the onset of these 15 recessions was 7.8%.
  • A $10,000 investment at the peak of the business cycle would have grown to $11,937, after two years on average.”



1 The Bumpy Road to the Market’s Long-Term Average, Dimensional Fund Advisors, May 2020.
2 Long-Term Investors, Don't Let a Recession Faze You, Dimensional Fund Advisors, May 2020.
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