Even after September’s weakness, the S&P 500’s trailing 12-month total return stood at an impressive 14.9%.  Given the events of the last 12 months, one could even say that performance is remarkable.  What’s even crazier is that the S&P 500’s performance over the last 12 months is more than three times stronger than the 12 month period before that (+4.25%).  The chart below compares the S&P 500’s annualized total returns over the last one, two, five, ten, and twenty years and compares that performance to the historical average return of the index over those same time periods.

The S&P 500’s historical average 12-month return is 11.7%, so the current 14.9% gain exceeds that average by more than three full percentage points.  Over a two-year window, though, the S&P 500’s annualized return of 9.4% is more than a full percentage point below the historical average.  Looking further out, the S&P 500’s trailing five and ten-year annualized return has been much stronger than average, which makes sense given the long bull market we were in.  Over a 20 year window, though, the S&P 500 is only just starting to work off some of the declines from the dot-com bust and as a result, the 6.4% annualized gain is four and a half percentage points below the long-term average of 10.9%.

Below we show how the current performance of the S&P 500 in each of the time frames shown compares to all other periods on a percentile basis.  The S&P 500’s performance over the last year ranks just below the 56th percentile of all other periods, while the two-year performance ranks just below the 42nd percentile. Even as the five and ten-year periods have seen well above average returns, they still rank in just the mid-60s on a percentile basis. The S&P 500’s ranking over a 20-year time period is a completely different story ranking in single-digits on a percentile basis.  Even with the equity market right near record highs, the last two decades have been forgettable for US equities.  Click here to view Bespoke’s premium membership options for our best research available.


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