Bonds Are Primed for a Better 2023, but How Much Better?

[progree]

4. Not for every 10 year period -- they vary quite a lot from one 10 year period to another

Last edited Sun Dec 11, 2022, 02:00 AM - Edit history (6)

For a very long time now, ten year returns average at least 10%/year.

Here's one of the S&P 500 index that I made in March 2020 when it went down during the pandemic. You can see there are some pretty long flat spots followed by a burst of high growth. Yes, it's missing dividends. But adding in dividends isn't going to turn flat periods into 10%/year periods.



One can calculate 10 year returns (including dividends) from this (it's just year-end values, so not a lot of granularity)
https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

For more granularity, one can use VFINX, the Vanguard S&P 500 index fund. It's a real fund with real expenses, so nobody in the Economy Group can blather about how yeah, but that's before the "House" takes its share. This is after expenses, what an actual investor would have realized.

https://finance.yahoo.com/quote/VFINX/history?p=VFINX
Use the "adjusted close" column to get total retun including distributions. (The "close" column is just the price).

Edited to add Rolling 10 year returns of the "US Stocks Portfolio ETF"

10 year annualized rolling returns over time: (also n year for various values of n):
http://www.lazyportfolioetf.com/allocation/us-stocks-rolling-returns/
Scroll down the page about 2/3 of the way down to get to the 10 year graph, labelled
"Annualized Rolling Returns - 10 Years (120 months)"

Speaking of just 1949 onward, for example, the graph shows the 10 year rolling average varying from -4.86% in Feb 2009 (meaning Mar 1999- Feb 2009) to +20.20% in December 1999 (meaning January 1990 - December 1999).

Edited to add: that -4.86% doesn't look too bad as the worst case in 73 years. But it's an average annual return over 10 years, that corresponds to a cumulative 39.2% loss over that decade, meaning a $100,000 nest egg turned into a $60,800 one: (100%-4.86% = 95.14% = 0.9514;  , 0.9514^10 = 0.608,   1-.608=0.392).

The latest 10 year average is December 2012 to November 2022: 10.99%

As for what this thing is --
http://www.lazyportfolioetf.com/allocation/us-stocks/

It says: "The US Stocks Portfolio can be implemented with the following ETFs: 100% VTI - Vanguard Total Stock Market

but it has data going all the way back to 1871!