…. “Even by long-term measures, we are not in a good spot now. The last 20 years have been “remarkably unkind” to U.S. equity investors compared with similar time frames since the end of World War II, according to Nicholas Colas, co-founder of DataTrek Research.
in a research report published Friday, Colas turned to a longer-term metric–the trailing 20 years compound annual growth rate (CAGR) of the S&P 500–to better understand where today’s market stands in the historical ebbs and flows. “Twenty-year returns wash out the noise of market cycles and show investment returns the right way: over a long-term horizon which highlights the power of compounding,” writes Colas .
If we assume the market ends the year at similar levels to today, the CAGR for S&P 500 stocks over the past two decades–from 1999 to 2018–would be 7.1% including reinvested dividends. The number comes down to 5.0% after an adjustment for inflation. That might seem like an unsatisfying reward for many, especially after investors “had to sit tight through two 30% drawdowns to get it”….
Read the full article here in Barron’s!