Wednesday, March 4, 2009

Rolling 10 Year Returns

A friend sent me this chart and I thought I'd post it here for interest's sake.

The chart shows the rolling 10 year total return produced by the S&P500 from 1935 to 2009. Clearly there are very long cycles at play in the markets and we happen to be in the bottom of one of those cycles right now. If history is any indication of the future we can look forward to above average returns over the next 10 - 20 years.

We will see.


Paul said...

do you have a chart like this for the tsx or dow?


mohican said...

Unfortunately not, TSX data doesn't go back that far and the dow is virtually the same as the S&P500.

dg said...

Should I be concerned about the chart in the link below regarding a recovery?[1][id]=AMBNS

patriotz said...

Good of you to use total return and not just the index, which ignores dividends.

My allocation in equities is now well below my target (no mystery why) and I plan to start rebalancing late this year. No I'm not going to try to time the bottom, that can't be done.

ValueMonkey said...

Superficially it looks like a trend, but charts can deceive.

Given there isn't good data to validate this over a longer period, why do you think the last major downturn on this chart (i.e. the great depression) should correlate with this economic downturn.

Consider unemployment as an economic health indicator. During the great depression we hit unemployment rates of 30%. Currently, unemployment in Canada is 7.2% and the US just hit 8.1%. Given this, do you think these cycles line up?

Personally, I won't believe it until we hit unemployment in the high teens.

Value Monkey