What were the best and worst years to have been invested in the S&P 500 (Index: SPX)?
Visual Capitalist's Dorothy Neufeld has answered that question using calendar year investment return data from 1874 through 2024. Although she calls it the "Pyramid of S&P 500 Returns", it's really a bell-shaped histogram chart.
Although this pattern is "bell-shaped", stock market returns are not well described by the kind of normal distribution often used in statistical analysis. Vance Harwood offers an excellent discussion demonstrating how the S&P 500 returns don't fit the standard bell curve distribution, in which he settles on using a Laplace distribution (also known as a double exponential distribution) to better model historic returns. Meanwhile, others find a Lévy stable distribution works better for modeling the extremes in the index' historic returns.
Previously, we found the average annualized return of investments in the S&P 500 starting in any month from January 1871 to the present and extending over all possible holding periods within this period from one month through 130 years in duration is about 9.4%.
Reference
Dorothy Neufield. Charted: The Pyramid of S&P 500 Returns (1874-2024). Visual Capitalist. [Online article]. 3 January 2025.
Vance Harwood. Predicting Stock Market Returns—Lose the Normal and Switch to Laplace. Six Figure Investing. [Online article]. 9 November 2024.
James Houghton and Kristin Osika. Application of Lévy stable distributions to stock market returns using econophysics. Parabola, Volume 59, Issue 1 (2023). [PDF document]. February 2024.
Labels: data visualization, math, SP 500
Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:
ironman at politicalcalculations
Thanks in advance!
Closing values for previous trading day.
This site is primarily powered by:
CSS Validation
RSS Site Feed
JavaScript
The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.
Other Cool Resources
Blog Roll
