Stocks/Bonds 20/80 Portfolio: Rolling Returns

Time Period: from January 1871 to October 2024 (~154 years)
Rebalancing: at every Jan 1st
Currency: USD
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When holding the Stocks/Bonds 20/80 Portfolio, how long should you stay invested to have high probability to achieve a positive return?

Over the selected period (~154 years), the longest duration with a negative return was 61 months (from May 1927 to May 1932).

This indicates that, within the same timeframe, any rolling period of 62 months or more has consistently resulted in a positive return.

Understanding this metric is crucial as it highlights the importance of a safe investment horizon. Knowing the minimum duration required to likely see positive returns helps investors set realistic expectations and reinforces the strategy of staying invested through market cycles. This approach can mitigate the emotional reactions to short-term market fluctuations and enhance the likelihood of achieving financial goals.

Previous vs subsequent Returns

Is there a correlation between past and future returns over all 10-year rolling periods?

The following chart illustrates the relationship between past returns (x-axis) and subsequent returns (y-axis).

Data points are aggregated to show occurrences, and you can zoom in by clicking or drawing over the desired area.

STOCKS/BONDS 20/80 PORTFOLIO
Previous vs Next Returns - 10 Years annualized
Time Period: 1 November 1994 - 31 October 2024 (30 Years)
Time Period: 1 January 1871 - 31 October 2024 (~154 years)

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As of Oct 31, 2024, the annualized return of the previous 10 years has been 3.74%.

Rolling Returns

A rolling return is a measure of investment performance that calculates the return of an investment over a set period of time, with the starting date rolling forward. This approach can provide a more accurate representation of the investment's historical performance and helps investors to evaluate the investment's consistency over time.

STOCKS/BONDS 20/80 PORTFOLIO
Annualized Rolling Returns
Annualized Rolling Returns - Inflation Adjusted
Time Period: 1 November 1994 - 31 October 2024 (30 Years)
Time Period: 1 January 1871 - 31 October 2024 (~154 years)
US Inflation Adjusted:

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