Days vs Decades – Stock Market Volatility


Hello everyone. This is Jordan Buffum with Voisard Asset Management Group. I wanted to provide a quick video update today on stock market returns. One of the client conversations that we have been having quite frequently has surrounded portfolio returns in 2022 and recent stock market volatility. Everybody has a temptation to look at the last year and focus on what’s going on and how this has impacted portfolio balances. It can be tempting to lose sight of the longer-term returns of the market. I wanted to provide just a quick history of stock market returns and take a look at some days in the market versus the last four decades of return that we’ve seen.

If we look at the Dow Jones starting in 1982, what we’ll see is that the Dow ended in 1982, or almost 40 years ago today, at just over 1000. Ten years later at the end of 1992, the Dow Jones closed at just over 3,300. Ten years after that at the end of 2002, the Dow closed at just over 8,300.  In 2012, or December 31st, 2012, the Dow closed at 13,000. And then at the end of 2022, the Dow Jones closed at 33,000.

Basically what you’ll see is regardless of when you started investing you’ve done well over the last four decades. If you put $100,000  into a portfolio in 1982, that portfolio would be worth roughly $3.3 million today.  That same $100,000  investment at the end of 1992, would represent a portfolio of just about a million dollars today. In 2002, you put the same $100,000  in and you end with a portfolio of $400,000. And then lastly, if you invested that $100,000 a decade ago or at the end of 2012, your investment has turned into $250,000.

So long term, when we look at decades at a time, investors have done really well. At the same time, when we look at individual years, what we can see is that the market can be quite scary. The “Worst Periods” chart shows stock market returns for almost the same period of the previous chart going back to 1980. The gray bars represent the actual returns of the S&P 500 index, and the red dots represent each year from peak to trough.

How far did the market fall in that year? So what you’ll see in the early eighties (1980, 1981 and 1982, the stock market fell almost 20%. A couple of short years later, in 1987, we saw a black Monday where the stock market fell over 20% in one day.  And from peak to trough, the market was down 34%. 1990, the market fell 20% from peak to trough. In 2000, we saw a -17, in 2001 at -30, and 2002 at -34. If you bunch those three years, what we saw was a total fall from peak to trough of just about 50%.In 2008 and 2009, most people remember that year’s market fell almost 50% from peak to trough. In 2018, the market was down 20%. In 2020, during the coronavirus, the market was -34%. And then most recently, from peak to trough in 2022, the stock market fell 25%. Basically we saw on average a pretty strong market decline every couple of years.

If we look at the amount of time that the market has been positive over the last 43 years, we’ve seen 32 years of positive returns. So what that equates to is about one in every four years, we’re seeing negative returns from the stock market.

And so what I want to do today is just refocus things – maybe shift our attention away from “What is the portfolio doing today?” or  “What is the stock market doing today?”  and focus on “Why are we investing?” If we’re not investing for today and we’re not investing for just this year or next year, we have a lot more time to focus on these decades of performance.

Hopefully, you have found this video helpful. Remember to reframe your thinking from the days, the months, and the individual years to the long-term power of compound returns in the market

Schedule an Investment Review

Share this post with your friends