Another Interesting Look at S&P 500 Index Returns

Take a look at the graphic below, which shows the percentage of months that were up and down for the S&P 500 Index going back to 1926 based on the month of the year:

S&P 500 Index - Percent Up and Down Months

For example, looking at the month of January….

There were 84 January months in my sample. Of those 84 months, 36.9% of them produced negative total returns, while 63.1% of them showed positive returns. The months with the biggest positive spread was December which showed that 78.3% of the months were positive compared to only 21.7% were negative.

For those who are interested, I ran the numbers for all the months and found that there were 1,006 months, of which 383 were negative months (38.1%) and 623 (61.9%) were positive.

Just a little trivia for your Thursday…

*The S&P 500 was known as the S&P 90 prior to February 1957.

7 thoughts on “Another Interesting Look at S&P 500 Index Returns”

  1. By that chart, I wonder if using t magic formula investing strategy with getting in in October and getting out the following August, then use the September to research a few companies for your next year. Seems like as good a selection method as any… I wonder if you could back test that very well.

  2. Shouldn’t we be looking at the average PERCENTAGE gain among those positive months vs. the average % negative gain? For each positive month it could have ranged from .01% to 300%+; likewise w/the negative range -.01% to ???. Sorry if you’ve done this already in a previous post. I’m guilty of not always looking at EVERY chart 😉

  3. Have a question:

    What reasonable standards should investors use to measure how well or poorly that they are doing?

    I’m sure that an answer would include “it depends” but if so, depends on what?

    We are about 10% under our 12.31.07 balances and we are pleased but how pleased should we be? There is always someone who well fare better or worse but I’m at a loss as to which reasonable “standards” that I should use to know how I’m doing?


  4. #6 Bill) An answer to your question about “reasonable standards to measure how well/poor investments are performing” should be to look at your goals, and see if your investments are still on track to meet those goals.

    If you are no longer on track to meet the goals, then some action on your part is probably necessary (invest more dollars, change the investment mix, etc). You’d want to look at your original assumptions about your investments and identify what was wrong with them so you don’t make the same mistakes twice.

    If you are on track to meet your goals, then you can ignore the day-to-day (or month-to-month) volatility. If you have the time, try to seek out ways to achieve the same return at a lower level of risk: lowering investment costs is a good start.

    At the end of the day, only you can decide whether your investments are living up to your expectations/goals. Here’s a tip: assume a conservative ROR, and be surprised on the upside in retirement (have extra money). You don’t want an overly optimistic assumption and be surprised on the downside in retirement (and have to go back into the workforce).

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