9 Charts Summarize 96-Year (1926-2021) Capital Markets History

Summary

• 2021 was a good year for stocks, but not bonds.
• The post-2008 recovery has been spectacular, one of the best 13-year US stock markets.
• We provide a table of details for the entire 96 years as well as 5-year and 10-year sub-periods.

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Here are investment performance highlights for the year 2021 and the 96 years 1926-2021:

1. Most asset classes earned positive returns in 2021. Real estate and commodities led with 41% returns. Bonds and gold lost value in the year.
2. Target date funds with long horizons and moderate risk earned double-digit returns in 2021, as they did in 2020.
3. Stocks, measured by the S&P 500, returned 29% in 2021, triple the 96-year average of 10%. Bonds lost 2% based on the U.S. Investment Grade (Bloomberg) Aggregate index, well below the 96-year average of 6%.
4. The 2021 stock return is above median and the 2021 bond return is below median.
5. The recovery from the 2008 stock market crash has been sensational. Stocks have soared 600% in the past 13 years, one of the best 13-year periods.
6. Target date funds started in 2008 and have grown to $3 trillion. Conservative TDFs have earned 8% per year over their 14-year history while aggressive TDFs have earned 9.5%. TDFs are excellent benchmarks for multi-asset portfolios.
7. Details are provided in a table.
8. There's never been a worse time to retire.

1. Most asset classes earned positive returns in 2021. Real estate and commodities led with 41% returns. Bonds and gold lost value in the year.

2. Target date funds with long horizons and moderate risk earned double-digit returns in 2021, as they did in 2020.

3. Stocks, measured by the S&P 500, returned 29% in 2021, triple the 96-year average of 10%. Bonds lost 2% based on the U.S. Investment Grade (Bloomberg) Aggregate index, well below the 96-year average of 6%.

Source: Target Date Solutions

4. The 2021 stock return is above median and the 2021 bond return is below median.

5. The recovery from the 2008 stock market crash has been sensational. Stocks have soared 600% in the past 13 years, one of the best 13-year periods.

6. Target date funds started in 2008 and have grown to $3 trillion. Conservative TDFs have earned 8% per year over their 14-year history while aggressive TDFs have earned 9.5%. TDFs are excellent benchmarks for multi-asset portfolios.

7. Details are provided in the following table.

Source: Target Date Solutions

8 There's never been a worse time to retire

Despite recent high returns, and partly because of it, this is a terrible time for our 78 million baby boomers to be retiring, as summarized in this interview. There are five reasons that it really is different, and bad, this time and ten threats to the economy and stock market that endanger baby boomer lifestyles in this decade.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Comments

[fridge31283]

Great information and am afraid a lot of boomers also are going to retire with too much debt.Hope people are listening to to these articles

[EyeBelieve]

Ron, how would you lower the risk in retiree portfolios? For instance, short term corporate bonds offer meager returns that still lose to inflation, but junk bonds are in greater danger of default. And even value stocks can crash.

[Ronald Surz]

@EyeBelieve Please watch our show on this topic at
www.youtube.com/...