As the 10th anniversary of the climactic March 2009 market bottom arrives this week, many observers are focusing on all the ways this period since the global financial crisis has been extraordinary.
The worst economic shock in 75 years felled huge financial institutions, roiled international alliances and ushered in the most aggressive central bank stimulus efforts ever seen, with zero or negative interest rates and purchases of trillions in securities the norm worldwide.
Yet perhaps more striking is how very typical this decade has been for stock market investors.
Since the S&P 500 sank briefly to 666 on March 6, 2009, and reached its closing low of 676 three days later, the index has delivered a 10-year annualized total return of 17.8 percent.
This neatly matches the annual gains (including dividends) posted by the S&P exactly 10 years after the October 1987 market crash (17.2 percent), and after the August 1982 bottom (17.6 percent), when the greatest modern bull market began. Even 10 years after the brutal bear-market trough of September 1974, the returns match up well: up 15.6 percent annualized through September 1984.
This chart, put together by Michael Batnick of Ritholtz Wealth Management, tracks the rolling 10-year trailing returns for U.S. stocks since 1935. A horizontal line drawn back in time from the current level (15-18 percent) would intersect with several of those moments 10 years after a brutal market washout, including in the mid-1950s.
Source: Michael Batnick
A few observations can be taken from this long-term view of how the market runs through alternating generous and stingy phases.
Staying or getting invested when stocks have been most disappointing and investors are questioning the long-term wisdom of equities (this happened in the late-'70s/early-'80s and after the 2008 crisis) has been rewarded with returns roughly 1½ times as good as the long-term average.