A Different Take on “Buy and Hold”, from Alston Mabry
Many/most analyses of buy & hold use a model where a set amount is invested in the market at a specific time and then tracked over X years, which doesn't seem very realistic and certainly isn't the only viable model. So here is a different model:
The results below are for the following: Invest $1000 every month in the S&P 500 and collect the dividends at the end of each year [1]. For each year, calculate the total value of shares and dividends for the 5 years ending with that year, e.g., 1960-1964. Also calculate the 5-year total's % over/under the $60,000 investment during the 5 years. Negative years highlighted, and mean and sd shown at the end.
Version 2, corrected for overstating dividend, which adds 2009 as a
negative (slightly) year:
date 5yr Total % over investment
Dec-15 $80,943 +34.9%
Dec-14 $91,399 +52.3%
Dec-13 $94,956 +58.3%
Dec-12 $77,990 +30.0%
Dec-11 $68,060 +13.4%
Dec-10 $67,534 +12.6%
—Dec-09 $59,566 -0.7%
—Dec-08 $47,067 -21.6%
Dec-07 $77,666 +29.4%
Dec-06 $80,894 +34.8%
Dec-05 $72,530 +20.9%
Dec-04 $68,208 +13.7%
Dec-03 $60,778 +1.3%
—Dec-02 $47,322 -21.1%
Dec-01 $63,044 +5.1%
Dec-00 $82,804 +38.0%
Dec-99 $112,527 +87.5%
Dec-98 $116,433 +94.1%
Dec-97 $108,250 +80.4%
Dec-96 $95,239 +58.7%
Dec-95 $88,800 +48.0%
Dec-94 $74,533 +24.2%
Dec-93 $81,002 +35.0%
Dec-92 $84,726 +41.2%
Dec-91 $87,246 +45.4%
Dec-90 $76,904 +28.2%
Dec-89 $91,919 +53.2%
Dec-88 $84,916 +41.5%
Dec-87 $84,079 +40.1%
Dec-86 $97,688 +62.8%
Dec-85 $96,159 +60.3%
Dec-84 $84,680 +41.1%
Dec-83 $90,854 +51.4%
Dec-82 $86,713 +44.5%
Dec-81 $79,628 +32.7%
Dec-80 $89,410 +49.0%
Dec-79 $76,722 +27.9%
Dec-78 $72,193 +20.3%
Dec-77 $69,175 +15.3%
Dec-76 $74,530 +24.2%
Dec-75 $63,669 +6.1%
—Dec-74 $50,482 -15.9%
Dec-73 $66,026 +10.0%
Dec-72 $79,389 +32.3%
Dec-71 $71,656 +19.4%
Dec-70 $67,302 +12.2%
Dec-69 $66,362 +10.6%
Dec-68 $76,575 +27.6%
Dec-67 $76,567 +27.6%
Dec-66 $70,349 +17.2%
Dec-65 $83,286 +38.8%
Dec-64 $83,760 +39.6%
mean: $78,856 +31.4%
sd: $14,535 24.2%
max: $116,433 +94.1%
min: $47,067 -21.6%