This year marks a milestone that most people may not notice, even though it helped shape the way millions of people invest today.
We now have 100 years of research-quality data on US stock market returns. ( Since 1926)
This century of evidence has changed how researchers, financial professionals and investors understand markets. More importantly, it has revealed several enduring lessons about risk, diversification, discipline and long-term wealth creation.
The value of this data is not that it allows us to predict what markets will do next.
Its real value is that it shows how markets have behaved through wars, recessions, inflation, financial crises, pandemics and major technological change.
How Market Data Changed Investing
A century ago, investors did not have access to the information we take for granted today.
There were no comprehensive databases showing how the overall stock market had performed. Investors often relied on fragmented information, stockbrokers or records that excluded companies that had failed.
This changed when researchers at the University of Chicago created the Center for Research in Security Prices, commonly known as CRSP.
They compiled reliable market data going back to 1926, including dividends and companies that had disappeared. This allowed researchers to answer an important question:
What had investors actually earned from owning the market?
Over the 100 years from 1926 to 2025, the US stock market delivered an annualised return of approximately 10%.
This does not mean investors earned 10% every year. Some years produced strong gains, while others suffered severe losses.
The result only becomes clear when viewed over a much longer period.
A Century of Uncertainty
The past 100 years were far from predictable.
Investors lived through the Great Depression, the Second World War, oil crises, high inflation, market crashes, the Global Financial Crisis and the COVID-19 pandemic.
At many points, the future appeared deeply uncertain.
Yet businesses continued to adapt. Entrepreneurs continued to innovate. Workers continued to create products and services. Investors continued to provide capital to companies seeking to grow.
Not every company survived, and not every market performed equally well. However, the broad market continued to reflect the long-term progress and resilience of businesses and people.
When we invest in a diversified portfolio, we are not simply investing in share prices.
We are participating in human ingenuity and economic growth.
The Power of Compounding
One of the clearest lessons from the 100-year dataset is the power of compounding.
According to Dimensional’s illustration, US$1,000 hypothetically invested in the broad US market 100 years ago would have grown to approximately US$17.1 million by the end of 2025.
This is not a promise of future returns. It simply shows what may happen when capital is allowed to compound over a very long period.
However, compounding requires time.
Selling after markets fall, waiting for certainty before reinvesting or repeatedly changing strategies can interrupt the process.
Five Lessons From 100 Years of Evidence
First, uncertainty is part of investing. Stocks have historically delivered higher long-term returns than lower-risk assets, but they have also experienced greater volatility.
Second, diversification matters. It is difficult to consistently identify the next winning company, sector or market. Diversification reduces the need to make perfect predictions.
Third, time in the market matters. Short-term movements are unpredictable, so portfolios should be aligned with the investor’s actual time horizon.
Fourth, costs matter. Fees, taxes, transaction costs and frequent trading can reduce the returns investors ultimately receive.
Fifth, behaviour matters. Even a well-constructed portfolio may fail if the investor abandons it at the wrong time. Fear may cause investors to sell after markets fall, while excitement may encourage them to buy after prices have already risen.
Final Thoughts
The most important lesson from 100 years of market data is not a specific return figure.
It is that long-term investment success has generally been built on a few enduring principles:
Maintain a long-term perspective. Diversify broadly. Manage costs. Take an appropriate level of risk. Avoid relying on short-term predictions. Remain disciplined when markets become uncomfortable.
Investors cannot control market returns.
They can control how much they save, how they diversify, how much they pay and how they respond during volatile periods.
After a full century of evidence, those decisions remain among the most important drivers of a successful investment experience.
Let’s Review Your Investment Strategy
Understanding market history is useful, but the more important question is whether your current investment strategy is properly aligned with your goals, time horizon, risk tolerance and overall financial plan.
A good portfolio should not simply aim for returns. It should also be diversified, cost-conscious, suitable for your circumstances and structured in a way that you can remain committed to during difficult market periods.
If you would like to review your existing investments, understand the risks you are taking or explore how your portfolio can better support your long-term goals, feel free to speak with me.
Let’s have a conversation about building an investment strategy that is evidence-based, disciplined and designed around what matters most to you.
General Advice Disclaimer
The information in this publication or any dissemination of information in any form is not intended to be and does not constitute financial advice, insurance advice or any other advice or recommendation of any sort offered or endorsed by finexis advisory Pte Ltd (“finexis”).
The information is not to be relied on as investment, legal, tax or other advice as it does not take into account the investment objectives, financial situation or particular needs of any specific investor.
Investment products are subject to investment risks including the possible loss of the principal amount invested. References may be made to past performance of investment products and it may not be indicative of future results. Buying insurance policy or investment product may require long-term commitment. An early termination of the policy or product usually involves high costs and the surrender value payable may be less than the total amount paid. Please refer to the relevant documents such as product summary or policy contract for the exact benefits and features.
If you need clarification, please do not hesitate to ask your financial consultant. You should not make any decision based on the information without undertaking independent due diligence and consultation with your financial consultant.
The information provided is accurate as at the date of publication and may be subject to change without notice.
