Mid-Year Market Review – Actually a Little Longer: One Hundred Years of Stock Market History & What Investors Should Actually Learn

Mid-Year Market Review – Actually a Little Longer: One Hundred Years of Stock Market History & What Investors Should Actually Learn

By Anthony Criscuolo, CFP®

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Happy Birthday America! I hope everyone had fun celebrating our 250^th birthday this past weekend. As the calendar moves into July, I usually write a quick market update with a look back at the first half of the year. This year though, I’d like to go back a little further – how about 100 years.

This year marks a remarkable milestone that most investors probably didn’t even notice. We now officially have a full century of dependable, research-quality data on U.S. stock market returns beginning in 1926. For the first time, investors can study one hundred years of market history using a comprehensive database that includes both the winners and the losers – not just the companies that survived (See: The Miracle of Markets and the 100-Year Dataset That Changed the World, By David Booth, Founder and Chairman, Dimensional Fund Advisors) ¹.

Those one hundred years include the Great Depression, World War II, the inflation crisis of the 1970s, Black Monday, the dot-com bubble, the 9/11 terrorist attacks, America’s longest war, the Global Financial Crisis, the COVID pandemic, and now the rise of artificial intelligence. There were countless moments when investors believed the world had fundamentally changed forever – and no doubt, the world has changed. Through all of it, businesses continued innovating, capital continued flowing to productive ideas, and markets kept moving forward. That alone is remarkable. See the visual below with so many of the major events over the last 100 years.

The next 100 years are sure to have many of the same, and of course many completely different, events. I expect financial markets will continue on – with new companies, new investors, new products and services, and new consumers. The biggest lesson is that there is always something to cause fear or uncertainty, yet businesses continue to innovate, adapt, and create value for investors over time. But perhaps the biggest lesson from one hundred years of investing is not that stocks produced positive long-term returns – the biggest lesson is how investors actually capture those returns.

A Century of Evidence Supports Long-Term Investing

One of the original goals behind assembling this historical database was surprisingly simple: What have stocks actually returned? Today we finally have an answer based on evidence rather than anecdotes. Over the past century, the broad U.S. stock market has compounded at roughly 10% annually despite experiencing enormous uncertainty along the way.

That number is impressive, but by itself it tells only part of the story. The path to those returns was anything but smooth. There were years when markets gained more than 30%. There were years when they lost more than 30%. Entire decades have felt disappointing (most recently, the ten years from 2000-2009), while others produced extraordinary gains. Investors lived through wars, recessions, banking crises, inflation, changing tax laws, political transitions, and technological breakthroughs that permanently reshaped the global economy. Yet markets continued rewarding long-term, patient investors. The real miracle isn’t that markets went up every year – they certainly did not. The miracle is that, despite all of the uncertainty, businesses created value, innovation improved productivity, and disciplined and diversified investors were rewarded over long periods.

The power of compounding also becomes much easier to appreciate over very long horizons. At a 10% annual return, a single $100 investment grows to about $260 after 10 years, approximately $11,740 after 50 years, and more than $1.37 million after one hundred years. The remarkable part isn’t the first decade or two. It’s the decades that follow, when compounding begins doing the heavy lifting – it’s the “snowball” effect on wealth! This is why time is such a valuable asset for investors. The earlier you begin and the longer you stay invested, the more time compounding has to work in your favor. I know most people do not have 100-year investment time horizons, but this helps show the power of compounding.

An additional observation from the century of data is equally reassuring for long-term investors. When researchers looked at every rolling 10-year investment period over the last century, investors who stayed invested for a full decade ended with positive inflation-adjusted (real) returns roughly nine out of every ten times. While no one can guarantee future results, this reinforces the idea that patience has historically been rewarded, even over just 10-year periods. Short-term volatility is inevitable, but time has been one of the investor’s greatest allies.

The data also show something we would expect from a healthy and well-functioning capital market. Over the last century, U.S. stocks returned about 10% annually, U.S. bonds approximately 6%, and Treasury bills generally kept pace with inflation. That relationship makes intuitive sense. Stocks are riskier than bonds, and bonds are riskier than cash. Investors who accept greater uncertainty have historically been compensated with higher long-term expected returns. Risk and return are connected – not perfectly in any given year, but remarkably consistently over long periods.

Of course, none of this history guarantees future returns. Markets will continue experiencing periods of volatility, and the next one hundred years will almost certainly include events we cannot imagine today. But after studying a full century of market history, one principle continues to stand out: Investing is not about predicting the future – that is a fool’s game – rather, it is about planning for an uncertain future.

Knowing what the market returned over the last century is only half the story. The more interesting question is how those returns were actually generated – and the answer surprises many investors.

The Most Surprising Lesson: Where the Returns Came From

Perhaps the most fascinating research to emerge from this expanded one-hundred-year dataset comes from Professor Hendrik Bessembinder of Arizona State University. His findings challenge one of the most common assumptions investors make: while the stock market created extraordinary wealth over the past century, the average individual stock did not.

His research examined nearly 30,000 publicly traded companies between 1926 and 2025. The results were remarkable. Nearly 60% of individual stocks actually destroyed shareholder wealth relative to simply investing in one-month Treasury bills. Only about 28% of stocks outperformed the overall market. Most surprising of all, just 46 companies accounted for half of all the wealth created by the U.S. stock market over the last one hundred years ².

That statistic deserves a moment of reflection. Out of nearly 30,000 companies, only 46 generated half of the market’s total wealth creation. Looking backward, many of those companies may appear obvious. Apple, Microsoft, Amazon, Nvidia, Coca-Cola, IBM, and a handful of others seem like inevitable winners today (of course many of these are the most recent huge winners – who knows if they continue to be winners for the next 100 years).

Looking forward is an entirely different challenge. Few investors predicted decades ago that Apple would become one of the most valuable companies in history – Apple was actually a struggling company for many years before it really came into fame with the iPod and eventually the iPhone. Even fewer foresaw Nvidia’s rise from a niche graphics-chip manufacturer to one of the world’s largest companies supporting the AI industry. Every generation believes today’s winners are obvious, but history repeatedly reminds us that tomorrow’s winners rarely look obvious in advance.

This is one of the strongest arguments for humility in investing. Markets reward innovation, but they rarely reveal in advance exactly where that innovation will create the greatest long-term wealth. It is tempting to make concentrated bets, but history suggests the odds are much higher that your concentrated portfolio will contain many companies that never become the next great wealth creators. You might also miss the best ones by being concentrated in the wrong companies (i.e., missing out on the 46 that created most of the value, and/or buying them early enough to actually participate in the growth). Concentrated portfolios don’t just need to own the “right” stocks – they have to own them before everyone else does to get the growth before the valuations are sky high.

Concentrated Portfolios Are Really Just Risky Predictions (or “Guesses”)

This research highlights one of the greatest risks investors face: concentration. Whether it’s a handful of individual stocks, one particular sector, or a single investment theme, concentrated portfolios ultimately depend on making accurate predictions over long periods of time. A concentrated portfolio quietly says: “I know which companies will become the next great wealth creators.” Sometimes those predictions work – most of the time, they don’t.

History is filled with companies that once appeared untouchable before eventually fading into irrelevance. Fifty years ago, investors believed the future belonged to a very different group of companies than they do today. Twenty-five years ago, internet stocks dominated investor attention. Did AOL and Yahoo become the greatest companies ever? Who would have “guessed” the small online bookseller Amazon.com would be more valuable (and essentially a completely different company) than those early tech titans?

Today the spotlight belongs to artificial intelligence. Twenty-five years from now, the market leaders will almost certainly look different once again. This is not an argument against innovation or owning exceptional businesses. Quite the opposite; innovation is exactly what drives long-term market returns. The challenge is identifying tomorrow’s winners before everyone else does.

Diversification recognizes that uncertainty instead of trying to eliminate it. Rather than attempting to identify the next handful of extraordinary companies, diversified investors own many businesses across many industries and allow the market itself to determine tomorrow’s winners. That approach rarely feels exciting – it simply works – and over very long periods of time it has produced about 10% annualized returns (of course, no future return is guaranteed). This is a good time to revisit a prior Bluerock article: Diversification Is Not About Defense — It’s Disciplined Offense ³.

The Investment Principles Extend Well Beyond the United States

It is important not to misunderstand what this one-hundred-year dataset tells us. The research focuses on U.S. public markets because that is where the longest and most comprehensive historical database exists. It does not necessarily follow that investors should concentrate exclusively in U.S. stocks.

The investment principles are much broader than the dataset itself. Human ingenuity is not limited to one country or region. Businesses innovate around the world. Consumers live around the globe. Capital markets continue to evolve, and investors today have access to opportunities that simply did not exist for much of the last century.

Many international markets, global REITs, emerging markets, and other asset classes do not have one hundred years of comparable history. That is perfectly reasonable. Some of these markets simply have not existed in their current form for a century. The absence of one hundred years of data does not invalidate the principles behind owning them.

Diversification has never depended on every asset class having identical histories. It depends on recognizing that different regions, industries, and types of investments experience different economic cycles, different valuations, and different sources of return. Simply put, market leadership changes – and often when investors least expect it.

There have been extended periods when U.S. stocks significantly outperformed international markets. There have also been lengthy periods when international stocks produced stronger returns than the United States. Small companies have enjoyed decades of leadership before giving way to larger companies. Growth stocks have taken turns with value stocks. Interest rates, inflation, currencies, and demographics all influence these cycles over time. No single country, investment style, or asset class wins forever. That is precisely why we diversify.

Investors are feeling this right now through the first half of 2026 (and most of last year) as we are seeing stock market returns driven higher by international stocks, emerging markets, and small-cap stocks. (There, that was my first-half 2026 market update hidden in this 100-year review 😊).

Diversification Is a Discipline, Not a Forecast

Some investors think diversification simply means owning “a little bit of everything,” but this misses the point. Diversification is not about maximizing the number of investments you own. It is about reducing your risk and dependence on any one investment, company, country, or economic outcome.

Diversification is sometimes criticized because it almost guarantees that part of your portfolio will lag every year. This is directionally correct – not everything you own can be the best performer always. If every investment you own is moving together, you probably aren’t diversified at all. A well-constructed portfolio may always have something that feels out of favor at the moment, because different asset classes move through different market cycles. As we have said before, diversification is not passive – it’s strategically patient. 

Diversification is an acknowledgement that no one can consistently know which companies, sectors, or countries will lead markets over the next year, or decade, and certainly not for the next 100 years! A thoughtfully diversified portfolio accepts that uncertainty rather than trying to outsmart it. It also naturally encourages one of the simplest, yet most effective, investment disciplines: rebalancing. When one part of a portfolio dramatically outperforms another, rebalancing systematically trims positions that have become relatively expensive and adds to areas that have become relatively attractive. This forces a “buy-low, sell-high” strategy without forecasts or market timing. Rather than chasing recent winners, investors maintain balance, manage risk, and avoid allowing yesterday’s success to become tomorrow’s concentration risk. Over multiple market cycles, disciplined rebalancing has repeatedly proven its value.

One Hundred Years Is a Powerful Teacher

One hundred years is about as thorough an investment experiment as we could hope for. The evidence includes wars, recessions, inflation, political change, financial crises, technological revolutions, and thousands of companies competing to solve problems and improve people’s lives. Some became extraordinary successes. Many were acquired, many disappeared, and many simply failed to keep pace with a rapidly changing economy.

The market rewarded patient investors, as well as disciplined investors who remained diversified rather than attempting to predict which few companies would dominate the next generation. The future will almost certainly look different from the past. New industries will emerge. Today’s largest companies will eventually be replaced. Different countries and asset classes will move in and out of favor. That uncertainty is not a reason to abandon investing – it is precisely why thoughtful planning and a disciplined strategy matter more than ever.

In my opinion, the greatest investment advantage isn’t trying to find the next great company. It’s building a portfolio that doesn’t depend on finding it. Good investing has never been about predicting the future. It is about building a diversified strategy that can adapt to an uncertain future while remaining focused on your personal long-term financial goals. Ultimately, when you invest in a diversified portfolio of businesses, you are investing in human ingenuity itself – the ability of people and businesses to solve problems, innovate, and create value over time. After one hundred years of evidence, that may be the most enduring lesson of all.

Every decade we will gather another ten years of data. New companies will emerge. Today’s market leaders will eventually give way to tomorrow’s innovators. Investors will experience new recessions, new technological revolutions, and new reasons to believe “this time is different.” I suspect the fundamental lessons won’t change very much: diversification will still matter; patience will still matter; good planning will still matter.

I’ll see you in 2126 to update this article when we have 200 years of market history, made possible by some incredible future advances in healthcare – or perhaps AI-cyborg technology. And I intend to capture the returns of these companies as part of my diversified portfolio. I also expect I will write mostly the same thing again.

Anthony Criscuolo, Senior Wealth Manager

Sources:

1. The Miracle of Markets and the 100-Year Dataset That Changed the World, By David Booth, Founder and Chairman, Dimensional Fund Advisors
2. Bessembinder, Hendrik (Hank), One Hundred Years in the U.S. Stock Markets (March 18, 2026). Available at SSRN: https://ssrn.com/abstract=6438198 or http://dx.doi.org/10.2139/ssrn.6438198
3. Prior Bluerock article: Diversification Is Not About Defense — It’s Disciplined Offense

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