Conventional financial wisdom says the long-term trend of financial markets is generally upward. Even considering the declines over the past 18 months, what was the annual rate of return for the S&P 500 stock index for the 10-year period ending 3/31/2009? (Source: BTN research)
a. 5.2 percent
b. 3.4 percent
c. 1.2 percent
d. -3.0 percent
Answer: d.
The steep losses in 2008 wiped out all the gains from the previous nine years. According to BTN research, this 10-year period represents the eighth-worst decade for S&P investing since the S&P was established. (The worst 10-year period, from August 31, 1929 – August 31, 1939, registered total losses averaging -5 percent each year.)
