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The Real Story of a Century of US Stock Returns
The compound annual return is 10% nominal, 7% real. The reality includes flat decades and five drawdowns. Starting valuation explains 40% of 10-year returns.
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A century of US stock returns produces a compound annual figure of roughly 10% in nominal terms, 7% after inflation. Most investors know the headline. The underlying data tells a different story.
The 1930s lost a full decade. The 1970s delivered negative real returns. The 2000s from the dot-com peak through the financial crisis produced a flat nominal result. The smooth log chart hides five separate drawdowns of 30% or more since 1929. The average recovery took three to four years. Some took longer than a decade.