The stock market fell over 4% last month in a move that produced many attention-grabbing headlines. But zoom out, and the picture is much brighter for investors.
In this video from "The Five" from Motley Fool Live, recorded on Oct. 12, Fool contributors Jose Najarro, Brian Withers, and Demitri Kalogeropoulos put September's stock market decline in perspective that shows how strong the past decade (and the most recent year) have been for investor returns.
Brian Withers: I'm looking at the total return for the S&P. This is how I get the number for the show. I looked at the last 10 years and I can show this in percentage form. This is total returns, so it includes dividends, and that's how I get the number for the show: 346% Over the last five years, the market has more than doubled.
In just a rough estimate, in five years, the market needs to be about 15 percent to get a double. Around 15% return over the last five years.
Then if you look at the last one year, it's 27%, and a lot of people look at current year to date, a little arbitrary number, but the market is up quite a bit year to date, around 17% return.
Those are the numbers for 1, 5, 10 years. Really been a good market.
You can see certainly, as you pan out, some of these drops seem significant. But if you put your money in back here, and you opened your eyes five years later, you'd be very happy and you would have missed all of this drama in between.
Jose Najarro: In that chart, Brian, even if you put your money early on at the beginning, even at the drops it still seems like you would be somewhat happy with the returns.
Withers: Yeah. The problem is, we're human. If our portfolio goes up like this and then down like this, regardless of what this number was, 20% or, whatever we said well it was this before. [laughs]
I think we need to train ourselves not to look at our portfolio as often and there are less chances to get frustrated. [laughs]
Demitri Kalogeropoulos: Price anchoring, I think. But there's all these headlines about how awful and historically bad September was for stocks that were still like you said, we're still up. According to that chart, 17%, which is an amazing year for the stock market.
Withers: That's is an absolutely amazing year for the stock market. Over the long history, you can expect the market to do around 10, 11%. To do 17% is actually on average better.