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Long Term Investment (and your work)

The Measure of a Plan has a great set of graphics on U.S. stock market returns from the 1870s to 2022. In short, even including the worst years in history (with losses of more than 30%), the market generates a long-term positive return of around 7% per year.

For those who came in late, this is consistent with received wisdom, but it’s nice to see it graphed out year by year:

Source: The Measure of a Plan – U.S. Stock Market Returns – a history from the 1870s to 2022

And to see returns over 1 / 5 / 10 / 20 year period in this animated GIF:

Animated Gif of US stock market returns over 1 - 5 - 10 -20 year periods
Source: The Measure of a Plan – U.S. Stock Market Returns – a history from the 1870s to 2022

If you had invested $1,000 in the U.S. stock market on Dec. 31st, 1969 and held the investment until Dec. 31, 2022 (without buying or selling during that 53-year period), your investment would have grown to ~$182k before inflation, or ~$23k after inflation.

The Measure of a Plan – U.S. Stock Market Returns – a history from the 1870s to 2022

So what?

If you didn’t know this, it’s a helpful thing to know. It seems reasonable to assume that this trend will continue barring the total destruction of the system. The period we’re looking at includes the Great Depression and two world wars and all sorts of crises – but presumably we’d be looking at different results if we’d started in Russia before the revolution, or Germany in 1914 (a quick search suggests a 4.4% annualised return to investment in German stocks over the century to 2014).

It also got me thinking about the work we do. There will be ups and downs, losses and booms – but the trend is likely to be positive and (hopefully) compounding. Take heart! Keep going.

See also:

Anything yet: the hockey stick
Sam Altman on “compounding yourself”
Compound interest
Technology (17): Speeding up the S-Curve – Azeem Azhar and Hau Thai-Tang on the accelerating electrification of automobiles

I'd love to hear your thoughts and recommended resources...