Don't Fall For the Misconception!

Matthew Allgood |



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Don't fall for the misconception!


You may have heard the adage that the S&P 500 Index averages 9% a year, but it's crucial to look beyond this simplistic notion. As financial professionals, we understand the importance of analyzing the data behind such statements. Let's explore the facts:


Since 1950, the S&P 500 returned between 8-10% only four times. Contrary to popular belief, consistent 9% returns are quite rare. Looking at historical data, we can observe wider return swings in the market. Specifically, there were 21 years where the S&P 500’s annual return was negative and conversely, 20 different years where the S&P 500 achieved an impressive annual return exceeding +20%. These findings imply that the likelihood of encountering a down year or an exceptional one is akin to a coin flip.


We firmly believe in a non-binary approach to investment strategies. Emphasizing dynamism, we blend strategic and tactical mandates, enabling us to navigate varying market conditions effectively.


Achieving financial goals requires adaptability and prudence. Past performance should never be the sole basis for future expectations. By staying informed and maintaining a diversified portfolio, we can make well-informed decisions together.


Rarely Average


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Source: Bloomberg, Redwood. Data as of 7/21/2023. Date Range from 1950-2022.




Allgood Financial





Disclosure: This piece is for informational purposes only and contains opinions that should not be construed as facts. Information provided herein from third parties is obtained from sources believed to be reliable, but no reservation or warranty is made as to its accuracy or completeness. Charts and graphs are for illustrative purposes only. Discussion of any specific strategy is not intended as a guarantee of profit or loss. Specific securities mentioned are not recommendations to buy or sell. Past performance is not a guarantee of future results. Objectives mentioned are not guaranteed to be achieved. Investors cannot invest directly in any of the indices mentioned above.


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