15 Year Stock Market Returns

Through the end of September, these are the annual returns over various time frames for the S&P 500:

• 3 years +22.9%
• 7 years +16.2%
• 10 years +15.3%
• 15 years +15.7%
• 20 years +11.2%
• 30 years +10.3%
• 40 years +11.5%
• 50 years +11.9%

The average annual return over the past 100 years or so is 10% per year.

Everything from 20 years to 50 years are pretty close to the long-term average. But 15 years and down the returns are squarely above average.

Eventually above average returns lead to below average returns because, well, math. But mean reversion can take longer than you think. Just ask all of the people who have been screaming about high valuations since the mid-2010s.

Look at the rolling 15 year annual returns for the past 100 years of data:

The longer-term cycles are pretty clear here. It’s like a wave that moves from good returns to bad returns.

The good and bad cycles can take some time to play out.

The natural follow-up here is how much longer will the current cycle of above average returns last?

The only honest answer is nobody knows.

But it is worth providing some context in terms of historical precedent. This thing could keep going even higher. The AI boom could take us to the dot-com or post-WWII heights.

It wouldn’t shock me.

This is the S&P 500 from 1995-1999:

• 1995 +37.2%
• 1996 +22.7%
• 1997 +33.1%
• 1998 +28.3%
• 1999 +20.9%

And this was at the tail-end of a two decade-long bull market.

Now look at the returns since 2019:

• 2019 +31.2%
• 2020 +18.0%
• 2021 +28.5%
• 2022 -18.0%
• 2023 +26.1%
• 2024 +24.9%
• 2025 +17.8%
• 2026 +12.8% (so far)

Not a perfect one-for-one but we’ve had a pretty good run. Maybe we have a melt up coming our way.

It’s also worth pointing out the sample size here is very small. We’re essentially talking about three gigantic bull markets (including the current iteration) along with three bone-crushing secular bear markets.

Maybe the cycles will happen faster in the future or these return streams will be more uneven.

We shall see. These things aren’t written in stone.

For well over a decade there have been investment professionals telling you to expect lower than average returns in the future.

The opposite has happened.

However, it’s not the worst thing in the world to rein in your expectations for future returns, even if the bull market still has some years left to go.

Lower expectations in your investment plan gives you a bigger margin of safety.

If bad things happen, you’re prepared.

If good things continue to happen, it’s a nice surprise to the upside.

Win-win.

Further Reading:
When is Mean Reversion Coming in the Stock Market?