Unexpectedly Intriguing!
February 20, 2007

When were the best years to have ever invested in the S&P 500 stock market index? Last week, we introduced our chart showing the best inflation-adjusted rates of return ever obtained from the stock market index, but today, it's time to introduce our dynamic table!

We returned to our database of the S&P 500's performance since January 1871, and scanned month-by-month through every period ranging from 1 year to 50 years in length to sort out what the highest ever real returns were for our hypothetical investments and when they began.

In our analysis, we assumed full reinvestment of dividends, adjusted for inflation, and did not consider the effects of taxes or commissions and fees, which vary considerably over time. Our results for our hypothetical investment's holding periods between 1 and 50 years are summarized in the dynamic table below. You may sort the data by clicking the column headings - clicking the column heading once will sort by the selected category from low to high values, and clicking a second time will re-sort the table's data from high to low values.

Best Case Inflation-Adjusted S&P 500 Rates of Return
for Investment Holding Periods of 1 to 50 Years
Holding Period (Years) Starting Date
(Year-Month)
Ending Date
(Year-Month)
Nominal Return (%) Inflation Rate (%) Real Return (%)
1 1932-07 1933-07 139.8 -03.7 143.5
2 1932-06 1934-06 53.1 -00.7 053.8
3 1926-09 1929-09 38.7 -00.4 039.1
4 1932-06 1936-06 39.4 00.4 039.0
5 1924-09 1929-09 33.6 00.2 033.4
6 1923-09 1929-09 31.4 00.1 031.3
7 1922-01 1929-01 25.6 00.2 025.4
8 1921-09 1929-09 27.9 -00.1 028.0
9 1920-08 1929-08 23.0 -01.8 024.8
10 1919-09 1929-09 19.6 -00.3 019.9
11 1918-09 1929-09 20.3 00.9 019.4
12 1949-06 1961-06 19.4 01.9 017.5
13 1948-12 1961-12 18.2 01.7 016.5
14 1942-04 1956-04 20.1 03.7 016.4
15 1954-07 1969-07 18.2 02.1 016.1
16 1982-07 1998-07 19.7 03.3 016.4
17 1982-07 1999-07 19.7 03.2 016.5
18 1982-08 2000-08 19.0 03.2 015.8
19 1980-04 1999-04 18.4 03.9 014.5
20 1980-04 2000-04 17.9 03.8 014.1
21 1942-05 1963-05 16.3 03.0 013.3
22 1942-05 1964-05 16.4 02.9 013.5
23 1942-05 1965-05 16.3 02.9 013.4
24 1932-06 1956-06 16.0 02.9 013.1
25 1932-06 1957-06 15.6 02.9 012.7
26 1942-05 1968-05 15.1 02.9 012.2
27 1932-06 1959-06 15.6 02.9 012.7
28 1932-06 1960-06 15.1 02.8 012.3
29 1932-06 1961-06 15.2 02.7 012.5
30 1932-06 1962-06 14.2 02.7 011.5
31 1932-06 1963-06 14.7 02.7 012.0
32 1932-06 1964-06 14.7 02.6 012.1
33 1932-06 1965-06 14.6 02.6 012.0
34 1932-06 1966-06 14.3 02.6 011.7
35 1932-06 1967-06 14.1 02.6 011.5
36 1932-06 1968-06 14.1 02.6 011.5
37 1932-06 1969-06 13.7 02.7 011.0
38 1921-08 1959-08 11.8 01.3 010.5
39 1920-12 1959-12 11.5 01.1 010.4
40 1921-08 1961-08 11.7 01.3 010.4
41 1920-12 1961-12 11.6 01.1 010.5
42 1921-08 1963-08 11.4 01.3 010.1
43 1921-07 1964-07 11.6 01.3 010.3
44 1920-12 1964-12 11.4 01.1 010.3
45 1920-12 1965-12 11.4 01.1 010.3
46 1921-08 1967-08 11.4 01.4 010.0
47 1920-12 1967-12 11.2 01.2 010.0
48 1920-12 1968-12 11.3 01.3 010.0
49 1949-06 1998-06 13.6 04.0 009.6
50 1949-06 1999-06 13.8 04.0 009.8

The End of the Worst Marks the Beginning of the Best

Unlike our previous findings that found that the worst periods for having made an investment in the S&P 500 were defined by when the given holding period ended, when looking at the best ever real returns for the index, we find here that they're largely determined by when they began. More remarkably, they largely began at the end of the worst-ever recorded rates of return for the holding periods in question!

Here's what we mean. The worst ever month to have ended an investment in the S&P 500 is June 1932, which marks the end of 23 of the 50 worst holding periods for investments in the index that we previously recorded. June 1932 also marks the beginning of 15 of the 50 best holding periods for having launched an investment in the S&P 500.

We also see this pattern for the worst investing holding periods ending in 1920 and 1921, which accounts for 14 of the 50 worst 1-to-50 year holding periods, but also marks the beginning of 13 of the 50 best 1-to-50 year holding periods! And we see this same pattern for investments ending and beginning in 1980-1982 and 1942.

The Bubble Years

When we turn our attention to the years ending the best inflation-adjusted performance of investments ranging from 1 to 50 years in length, we find two timeframes that stand out above all others: 1929 and 1999-2000. Both are significant in that each of these years marks the pinnacles of the stock market bubbles of their day!

Together, these periods account for 13 of the 50 best recorded performances for investments made in the S&P 500. 1929 alone accounts for 8 of these top inflation-adjusted rates of return, with 1999-2000 accounting for the remaining 5.

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