So much of doing well in the stock market comes down to knowing what to expect. 

No one can predict what stocks will do in the short run, and we can only be reasonably confident in the long run. 

But here's what history says.

Yale economist Robert Shiller has market data going back to 1871. I adjusted it for dividends and inflation, then calculated the average annual returns for different holding periods. 

Here's the percentage of the time stocks produced different annual returns based on how long you've held them for: 

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The story is clear:

  • Hold stocks for less than five years and you're at the mercy of lots of randomness. Stocks rise in about 70% of all years, but huge booms or huge busts are more common than returns of 0% to 10% a year, the historic "average" annual return people tout. 
  • Hold for five years or more and your odds of success rise significantly. Eighty percent of five-year periods produced a positive result. 
  • At ten years, the odds of success are solidly in your favor. Almost 90% of 10-year periods are positive, and the 10% with negative results are nearly all small losses, especially once dividends are factored in. 
  • There's no 20-year period where you've lost money in stocks, even after inflation. 

That's the history of the stock market. 

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Contact Morgan Housel at mhousel@fool.com. The Motley Fool has a disclosure policy.