The New Normal Was the Old Normal

October 28th Weekly Market Update

Five years ago, the phrase “the new normal” began to be coined to describe the investment environment of the years that were to follow. Prognosticators claimed the new normal of the future was likely to include a lowered living standard, high unemployment, stagnant corporate profits, heavy government intervention in the economy, and disappointing stock market returns.

While certainly job growth has been sluggish and government intervention intense, how has the new normal been for investors? As it turns out — a lot like the old normal. In fact, over the past one-, three-, and five-year periods total returns for the S&P 500 were very average.

While the year is not over yet, if it were to end with Friday’s (October 25, 2013) year-to-date total return of 24.9%, it would be a very typical year for the stock market. The annual total return of 20 – 25% this year is the second most common outcome for the stock market since records for the S&P 500 began in 1927. In fact, were it not for the recent gains in 2010 and 2012 boosting the number of occurrences that returns fell in the 15 – 20% range, the 20 – 25% range would be tied for the most common annual outcome for the stock market.

For the full article: The New Normal Was the Old Normal