So how about this year? There are interesting patterns to note.
Shown below is the graph “S&P 500: past 50 years” - it shows the annual returns of the S&P 500 from 1970 through 2019. Highlighted in purple are those years when the calendar-year return eclipsed 30% (shown by the horizontal black line). It’s worth noting that, since 1970, we don’t see two years in a row with a 30% or higher return. In fact, the average return in the year after a 30%-plus return was 13.4%, including two years in which the following year’s return was negative (1981 and 1990).
What if you construct a 12-index portfolio, what will its performance be compared with S&P 500's performances? We will discuss this in next blogpost.