Quantcast

2 Charts Show How Effective Recovery From Recession Has Been


Shutterstock photo
  • The S&P 500 returned 15% in 2018
  • The 10-year return is 15.3%, placing it fourth in the last 9 decades, and 5% above the 10% average return over the past 93 years
  • The 10 year Sharpe ratio is 1.16%, 2nd best in the past 9 decades, as low risk (standard deviation) was rewarded with high returns

I can’t wait to celebrate our good fortune. We’re having a great recovery, and there’s no end in sight.  With two thirds of 2018 behind us, I thought I’d fill in the rest of the year by annualizing our return to date.  Then I link this in to look back over the past decade. The S&P 500 has returned 9.9% so far this year, which is an annualized 15% return. Linking this 15% into the previous 9 years provides the following perspectives.

The past decade has graced us with 15.26% returns per year, placing it fourth among the past 9 decades:

But the real story is in the risk-reward relationship we’ve enjoyed over the past decade, as shown in the next graph. Each unit of risk in the past decade has been rewarded  with 1.16% in return, making it the second best decade.

Conclusion

The past 10 years have been remarkable in delivering very generous returns with high reliability (low volatility). It would be easy to get used to this.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Economy , Financial Advisor Center , Stocks



More from Ron Surz

Subscribe






Ron Surz
Contributor:

Ron Surz











Research Brokers before you trade

Want to trade FX?