A subscriber asked about the historical experience (distribution of outcomes) of an investor with a 5-year horizon (holding period). To investigate we consider returns for 5-year intervals rolled annually at the end of each calendar year based on:
- Annual nominal and real total returns for Shiller's long-run S&P Composite Index during 1871-2025, offering 149 overlapping 5-year intervals (only 29.6 independent intervals). We frictionlessly reinvest dividends annually.
- Annual nominal capital gains for the S&P 500 Index during 1927-2025, offering 94 overlapping 5-year intervals (only 18.8 independent intervals).
- Annual nominal capital gains for the NASDAQ 100 Index during 1985-2025, offering 93 overlapping 5-year intervals (only 7.0 independent intervals).
Using much shorter samples available for assets such as exchange-traded funds offers results and comparisons of extremely low reliability. Using annual returns for the three indexes as described, we find that:
Subscribe to Keep Reading
Get the research edge serious investors rely on.
- 1,200+ research articles
- Monthly strategy signals
- 20+ years of backtested analysis
$17.99
/month
Cancel anytime