US Market Returns Over the Last 100 Years
This interesting chart tells you the different returns in the US markets for each year in the last approximately 100 years. There are about 100 data points on this chart, varying from very high 50% one-year gains to as low as 44-45% in a down year.
What we can see is that there have been some extremely down years, but not that many. There are about six or seven instances where the market declined by more than 20%, including 1930 and 1931 during the Great Depression, 1937, 1974, 2002 during the dot-com crisis, 2008 during the GFC, and 2022 more recently.
Looking at the distribution, most of the years fall within the 0-30% range, with relatively fewer instances beyond 30% and only a handful beyond 40%. These extreme gains were seen before the Great Depression and during the recovery after World War II.
The Importance of Staying Invested
When we talk about long-term averages, such as a 12% annual return for the Nifty, it is important to recognize that individual years rarely deliver exactly 12%. Instead, some years will bring returns of 20-40%, while others may see declines of 20-60%. Over time, these fluctuations combine to create the long-term average.
The key takeaway is that staying invested is essential to achieving these long-term returns. If an investor faces a severe down year, history suggests that the following years are often significantly positive. For example, after the deep decline of 1931, the market rebounded strongly with gains of 50% in 1933, another 50% in 1935, and 30% in 1936.
Similarly, after the 2022 down year, 2023 and 2024 were strong years, and while 2025 has been flat so far, the trend suggests further opportunities. After the declines in 1973-74, the market posted massive gains of 35% in 1975 and 25% in 1976.
The Long-Term Perspective
Cyclical market movements will continue to occur, and focusing too much on short-term losses or individual stocks can be a disservice to long-term portfolio growth. The real game is much broader—spanning across different sectors, market cycles, and economic conditions.
By committing to a strategy and staying invested through market ups and downs, investors increase their chances of benefiting from future recoveries. Market returns tend to improve after every down year, making patience and discipline crucial for long-term success.
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