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#7 - 150 years of data into 4 key insights

Stock Picking after Moat | Invest with Martin

Good morning and welcome to the newsletter!

Today we are going to look at 150 years worth of data from the world largest stock index.

It's a short read :)

I felt like changing it up, so we will get back to the stock analysis in next weeks newsletter.

The reason the S&P 500 Index is interesting, it that it controls a lot of the overall market movement. What happens here, is a very good indicator for how it's going in general on the stock market.

Happy reading!

4 insights from the largest index in the world

I analyzed 150 years' worth Yahoo Finance data, from the world's largest index. The "S&P 500" containing the biggest 500 companies in the US. Since 1872 it has crushed it.

Here are the 4 biggest insights:


The average return per year is 9%.

This means that if you put €5.000 into the index, then it doubles every 8 years. 8 years invested then gives €10.000, 16 years gives €20.000 and so on.

This is exactly why you'll see many benchmarks (including my own) of 9% return per year.

Sometimes you will also see this number being 7%. That's because the average inflation in the US over these 150 years has been 2%. So the "real return" as it's called, is in fact 7% (9% - 2%) when you adjust for inflation.

To explain this a bit further, we will likely have around 5% of inflation this year meaning that the stock market have to perform really well if we are to actually make any "real return".

So if we at the end of the year have an S&P 500 index return of just 4% for example, our real return will then be:

4% return - 5% inflation = -1% for the year 2022.


The magic 20 years of being invested.

If you held your investments for 20 years at any point during these 150 years, you would have never lost money!

This shows you how important it is, to stay in the market for the long term.

If you on the other hand hold for 10 years, historically you can't be sure to make money in this index, although it's still very unlikely.

I always keep 10 years as a good benchmark, for how long you should be invested in order to keep your risk lower. But the longer the better.


No one knows what next year will bring.

There's no short term system to when the index goes up or down.

So results from last year is not indicating results in the next.

In other words it's extremely hard to time your investment.

Luckily the S&P 500 index gave positive returns 68% of the time. You could take this as an opportunity, so that every year the index has a bad year you put in even more money.


It's been performing better after 1947.

In the first 75 years the index gave ~8% in average return per year.

In the last 75 years the index gave ~10% in average.

In other words people had the opportunity to make more money, as we've gotten more innovative and productive.

But again, what the world will bring the next years and decades is impossible to know.


1. Expect an average of 9% in yearly return or keep this as a benchmark

2. Stay invested for 20 years, to really minimize your risk

3. Don't time the market, no one knows what's going to happen next

4. We might see better returns over the very long term.

I hope these insights gave you some, well… Insights ;)

To buy into the S&P 500 index, you can go for these options:

Do you want to learn more?

Sign up to my "Basics of investing" course where you will learn all the basics of investments and get the right foundation and knowledge:


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