We hear it all the time: the easiest way to make money in the stock market is to extend your time horizon.
And there’s data to back it up.
The chart below shows how often the S&P 500 has generated a positive return over various holding periods since 1950.
As the holding period is extended, the odds of generating a positive return rises.
And it’s not just the odds. The average level of returns increase too.
But there’s a catch.
While longer time horizons have rewarded investors, they’ve also guaranteed volatility.
One of my favorite charts we’ve made at Exhibit A shows this.
The longer you stay invested, the greater your chance of experiencing a bear market.
The good doesn’t come without the bad.
There is no free lunch.
When setting expectations for your own personal portfolio (or for the advisors reading, your client’s portfolios), remember this chart.
PS: If you are an advisor and would like to see what these charts look like in your brand (updated daily), feel free to book a 20 minute demo of Exhibit A with me here.
That’s all for today. Thank you as always for reading and please consider sharing this newsletter with a friend if you enjoyed!