📈  Chart of the Week 2/16/2025
By Michael Allison, CFA
Investing in the stock market can be an emotional rollercoaster, but history consistently rewards those who remain patient. This week’s Chart, illustrating the S&P 500’s total return from 1928 to 2024, underscores a fundamental truth: the longer you stay invested, the greater your probability of success.
At any given moment, market movements are unpredictable. A one-day holding period has nearly the same odds as a coin flip—just 53% of days end in positive territory. Stretch that to a month, and the probability rises to 62%. But the real magic happens over longer time frames. Hold for a decade, and history shows a 94% chance of positive returns. Extend to 20 or 30 years? The market has never produced a negative return over those periods.
This is why market timing is a fool’s errand. Trying to predict short-term swings is not just difficult—it’s costly. Investors who sell in fear often miss the market’s best days, which disproportionately drive long-term gains. Instead of obsessing over when to buy or sell, the data supports a different approach: staying invested and letting time do the heavy lifting.
A long-term investment horizon offers two key advantages. First, it allows the power of compounding to work in your favor, exponentially growing wealth over decades. Second, it smooths out volatility—short-term market noise becomes irrelevant when viewed through the lens of a 20- or 30-year time frame.
The lesson? The stock market rewards patience, and history is clear—those who stay the course have a much better of achieving their investment objectives.
Interested in reading more of Mike's weekly newsletters? Click below to view The Sunday Drive.
Comments