Today’s chart shows the calendar year returns on the S&P 500 Index and the intra-year drops that occurred during those years. This reveals an interesting picture.
The average annual return since 1980 is 8.4%, a number which will likely ring a bell for investors familiar with long-term equity returns. But it is perhaps less well known that the S&P 500 Index also recorded an average intra-year drop of 13.9%. So, on average, investors have had to deal with a significant decline in stock prices every year. Obviously, it can be challenging to stay the course when confronted with these corrections.
This year the maximum intra-year decline is just 2%, way below the average. The good news is that there were some calendar years in which the intra-year decline remained very modest, though that was only in a limited number of years.
