It’s Easy to Forget the Market’s Good Years

During volatility, remember the market’s long-term track record.

Today, it feels like we’re facing one market crisis after another. And when times are challenging, it may seem like the only rational strategy is to play it safe to avoid losses. Yet FIGURE 1 shows that positive years far outweigh negative years.

Figure 1

Good Years Outnumber Bad Years

S&P 500 Index (1926–2021)

Average Annual Return: 10.60%

What’s more, the seemingly “safer” investment choices of bonds or cash may have provided temporary relief during volatile times, but historically, they’ve fallen far behind equity and balanced investors over the long term (FIGURE 2).

Figure 2

Four Investment Paths Through Good and Bad Years

Past performance does not guarantee future results. Indices are unmanaged and not available for direct investment. See back page for index definitions. Sources: Morningstar, Ned Davis Research, and Hartford Funds, 1/22.

Figure 2

Four Investment Paths Through Good and Bad Years

Number of positive years:

Number of negative years:

Percentage of positive years:

74%

Percentage of negative years:

26%

Number of years when gains were greater than 20%:

Number of years when losses were greater than 20%:

Average Annual Return: 10.60%

Talk to your financial professional to help avoid short-term decisions that could hurt your long-term results.

S&P 500 Index is a market capitalization-weighted price index composed of 500 widely held common stocks.

IA SBBI US Long-Term Corporate Bond Index measures the performance of US dollar-denominated bonds issued in the US investment-grade bond market including US and non-US corporate securities that have at least 10 years to maturity and a credit rating of AAA/AA.

IA SBBI US 30 Day T-Bill Index measures the performance of a single issue of outstanding Treasury Bill which matures closest to, but not beyond, one month from the rebalancing date. The issue is purchased at the beginning of the month and held for a full month; at the end of the month that issue is sold and rolled into a newly selected issue. The index is calculated by Morningstar and the raw data is from WSJ.

Important risks: Investing involves risk, including the possible loss of principal. • Fixed income security risks include credit, liquidity, call, duration, and interest-rate risk. As interest rates rise, bond prices generally fall. • Diversification does not ensure a profit or protect against a loss in declining market.Hartford Funds Distributors, LLC, Member FINRA.

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