Here Are the Best And Worst Rolling Index Returns 1973-2016. (2024)

The charts in this series show you stock market performance compared to other safer investments, like bonds or treasury securities. Returns are shown in the form ofrolling index returns.

S&P 500 Index Rolling Stock Market Returns

Here Are the Best And Worst Rolling Index Returns 1973-2016. (1)

Rolling returns do not go by the calendar year; instead, they look at every time period beginning anew each month over the historical time frame selected (e.g., one-year, three-years, five-years). Rolling returns give you a great picture of how the stock market performs over both good andbad times. You don't get this complete view when you look only at average returns. The average smooths out the ups and downs.

Over short time periods, an can deliver exceptionally high returns or exceptionally low returns, depending on the time period you are invested. The chart above looks at the one-, thee-, five-, ten-, fifteen-, and twenty-year rolling index returns of the S&P 500 Index over the time period of January 1973 through December 2016.

The worst one-year rolling time frame delivered a return of -43%, which occurred over the twelve months ending in February 2009. The best one-year index return delivered a 61% return, which occurred over the twelve months ending in June 1983.

If you were a long-term investor, the worst twenty years delivered a return of 6.4% a year, which occurred over the twenty years ending in May 1979. The best twenty years delivered an average return of 18% per year, which occurred over the twenty years ending in March 2000.

1-Year Rolling Time Frames

Here Are the Best And Worst Rolling Index Returns 1973-2016. (2)

Over short time periods, stock indexes can deliver exceptionally high returns or incredibly low returns, depending on the time period you were invested.

The chart above looks at rolling one-year returns of the S&P 500 Index and three different bond indices from January 1973 through December 2016, and Russell 2000 Index returns from January 1979 through December 2016 (The Russell 2000 Index tracks the performance of small cap stocks, and data is not available prior to January 1979.)

The Russell 2000 Index, on the far right, delivered its worst one-year return of -42% over the twelve months ending in February 2009. It's best one-year return of 97% occurred over the twelve months ending in June 1983.

3-Year Time Frames

Here Are the Best And Worst Rolling Index Returns 1973-2016. (3)

When viewed over a few years, stock indexes can also deliver high or low returns, depending on the time period you were invested. There are three-year time periods where you probably would not have made money in the stock market.

The chart above looks at rolling three-year returns of S&P 500 Index and three different bond indices from January 1973 through December 2016, and Russell 2000 Index returns from January 1979 through December 2016.

Long-term government bonds, shown in orange, delivered their worst three-year return of -6% a year over the three years ending in September 1981. Their best three-year return of 25% occurred over the three years ending in August 1986.

5-Year Time Frames

Here Are the Best And Worst Rolling Index Returns 1973-2016. (4)

The chart above looks at rolling five-year returns of and three different bond indices from January 1973 through December 2016, and Russell 2000 Index returns from January 1979 through December 2016.

The S&P 500 Index, shown in bright red, delivered its worst five-year return of -6.6% a year over the five years ending in February 2009. The best five-year return of 30% occurred over the five years ending in July 1987.

10-Year Time Frames

Here Are the Best And Worst Rolling Index Returns 1973-2016. (5)

Over longer time periods, you are less likely to experience negative returns, even in volatile investments like stocks.

The chart above looks at rolling ten-year returns of S&P 500 Index and three different bond indices from January 1973 through December 2016, and Russell 2000 Index returns from January 1979 through December 2016.

The S&P 500 Index, shown in bright red, delivered its worst ten-year return of -3% a year over the ten years ending in February 2009. The best ten-year return, of 20% a year, occurred over the ten years ending in August 2000.

Various 15-Year Time Frames

Here Are the Best And Worst Rolling Index Returns 1973-2016. (6)

As the time period that you remaininvested gets even longer, you are even less likely to experience negative returns when investing in a stock index fund.

The chart above looks at rolling fifteen-year returns of S&P 500 Index and three different bond indices from January 1973 through December 2016, and Russell 2000 Index returns from January 1979 through December 2016.

The S&P 500 Index, shown in bright red, delivered its worst fifteen-year return of 3.7% a year over the fifteen years ending in August 2015. The best fifteen-year return of 20% a year occurred over the fifteen years ending in July 1997.

20-Year Time Frames

Here Are the Best And Worst Rolling Index Returns 1973-2016. (7)

When looking at twenty-year chunks of time, stocks have delivered positive returns, even during the bad twenty-year periods.

The chart above looks at rolling twenty-year returns from January 1979 – December 2016. The S&P 500 Index, shown in bright red, delivered its worst twenty-year return of 6.4% a year over the twenty years ending in May 1979. The best twenty-year return of 18% a year occurred over the twenty years ending in March 2000.

One thing to be cautious about when studying this data; historical bond returns look pretty decent! Much of that was due to a decreasing interest rate environment. If interest rates gradually climb back over the next decade, bond index returns won't look great.

Frequently Asked Questions (FAQs)

How do you calculate rolling returns?

If you're calculating rolling returns on an annual basis, then your first step is to calculate the returns for each year you want to capture in your calculation. Then, simply add those returns together and divide them by the number of years covered. For example, if you're calculating rolling returns for the past 10 years, then you would find the returns for each of those 10 years, add those figures together, and then divide that answer by 10.

Why do stocks have the potential for higher returns than bonds?

Bonds are fixed-income investments. If you buy a bond and hold it to maturity, then you know exactly how much money you'll make. Stock investors don't have that same guarantee, but they also don't have any caps on how much they can earn. In general, the more uncertainty with an investment, the higher returns an investor will expect to justify the relatively higher levels of risk.

As a seasoned financial expert with a deep understanding of investment dynamics and market performance, let's delve into the concepts presented in the provided article on stock market returns and comparisons with safer investments like bonds and treasury securities.

The article primarily focuses on the analysis of rolling index returns, specifically those of the S&P 500 Index, over various time frames ranging from one to twenty years. The use of rolling returns is a sophisticated approach, providing a comprehensive view of market performance that goes beyond simplistic annual averages. This methodology captures the inherent volatility of the market, offering insights into both prosperous and challenging periods.

Rolling Returns Overview:
- Rolling returns differ from traditional calendar-year returns. They are calculated by considering every possible starting point within a given time frame, such as one, three, five, ten, fifteen, or twenty years. This approach eliminates the smoothing effect of averages and provides a more nuanced perspective.
S&P 500 Index Performance:
- The S&P 500 Index, a benchmark for U.S. stock market performance, is used to illustrate rolling returns over different periods.
- The article presents both the best and worst rolling returns for the S&P 500 Index, showcasing extreme scenarios. For instance, the worst one-year return was -43%, while the best was an impressive 61%.
Time Frames and Returns:
- The article systematically explores rolling returns over one, three, five, ten, fifteen, and twenty-year periods.
- It highlights that shorter time frames, such as one year, can exhibit significant volatility, whereas longer time frames tend to provide a more stable outlook.
Comparison with Bonds:
- Bonds, including intermediate and long-term government bonds, are used as benchmarks for safer investments.
- The comparison emphasizes the narrower range of outcomes for bonds compared to stocks, particularly in the context of one-year returns. Bonds show a more consistent performance, with less extreme highs and lows.
Risk and Return Relationship:
- The article touches on the concept of risk and return, explaining that stocks have the potential for higher returns than bonds due to their inherent uncertainty. Investors in stocks accept greater risk in exchange for the potential of higher rewards.
FAQs - Rolling Returns Calculation and Stock vs. Bond Returns:
- The article includes a section of frequently asked questions, addressing how rolling returns are calculated and explaining why stocks have the potential for higher returns than bonds. This adds educational value to the reader, enhancing their understanding of the presented data.

In summary, the article provides a comprehensive analysis of stock market performance using rolling returns, emphasizing the importance of considering different time frames for a more nuanced understanding. It also educates readers on the calculation of rolling returns and the risk-return dynamics between stocks and bonds.