Unexpectedly Intriguing!
August 22, 2005

Not that long ago, Political Calculations mapped the extremes of the calendar year to calendar year performance of the S&P 500 stock market index over 105 years from 1900 through 2004. What Political Calculations didn't do was to find the average rates of return for the S&P 500 index for each given holding period over that interval. So, it was back off to the data mines, and what we found is remarkable: the average nominal rate of return for the S&P 500 is essentially flat for any stock holding period, whether it be 1 year, 50 years or 105 years!

S&P 500 Extreme and Average Returns, 1900-2004
Click for a larger image.

That's right! With vary little variation, the average of average rates of return for each investment holding period from the beginning of 1900 through the end of 2004 is 7.78%. So, if you're interested in calculating the future of your investment in the S&P 500 based on average annual rates of return, just plug 7.78% into Political Calculations' Investing: Future Value calculator for your results!

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