For over two years, Wall Street’s bulls have been charging ahead, pushing the Dow Jones Industrial Average, S&P 500 (^GSPC 0.24%), and the Nasdaq Composite to multiple record highs. But can this momentum last?
There are reasons to believe the rally could hit a wall. The first major drop in U.S. M2 money supply since the Great Depression (2023), the longest yield-curve inversion in history, and the S&P 500’s Shiller price-to-earnings ratio reaching one of its highest levels in 154 years are all flashing warning signs.
While investors turn to historical markers for guidance, predicting short-term market moves with absolute accuracy is impossible. However, one investment strategy has been foolproof since 1900. If you’re looking for the closest thing to a guarantee in the stock market, this is it.
Perspective Is Everything
The biggest factor determining an investor’s success? Perspective. Whether you focus on the short term or zoom out to see the bigger picture makes all the difference.
History shows that economic cycles of expansion and recession are inevitable. But while downturns can be nerve-wracking, they’re historically short-lived.
Since World War II ended in 1945, the U.S. economy has weathered 12 recessions, each lasting an average of just 10 months. On the flip side, economic expansions typically last around five years. That means while pessimists will eventually be right, long-term Investment betting on economic growth have consistently come out ahead.
This cyclical pattern is evident in the stock market, too.
A June 2023 analysis by Bespoke Investment Group examined bull and bear markets for the S&P 500 since the Great Depression (1929). The average bear market lasted 286 days (about 9.5 months), while bull markets ran for 1,011 days (about 2 years and 9 months).
Simply put: bull markets last longer, and they more than make up for the temporary pain of bear markets. The key to success? Holding your investments long enough to let history work in your favor.
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This Strategy Has Never Failed in 124 Years
Among all market correlations, none is stronger than the long-term performance of the S&P 500.
Each year, Crestmont Research updates its rolling 20-year total return analysis of the S&P 500, including dividends. While the index was officially created in 1923, researchers tracked its components in earlier indexes, allowing them to back-test returns to 1900.
Crestmont examined 106 rolling 20-year periods (e.g., 1900–1919, 1901–1920, etc., up to 2005–2024). The result? Every single one of those 106 periods generated a positive annualized total return. That’s a 100% success rate.
How Much Could You Have Made?
These weren’t small gains, either:
- About 90% of the rolling 20-year periods produced annualized total returns of at least 6%.
- Half of the periods delivered annualized returns between 9.3% and 17.1%.
In other words, in half of these cases, investors doubled their money in less than eight years. If you had invested at any point since 1900 and held for 20 years, you’d have walked away with a solid profit—no matter what economic disasters occurred along the way.
How to Take Advantage of This Foolproof Strategy
The best part? You don’t need to be a stock-picking expert to benefit. Exchange-traded funds (ETFs) make it easy for anyone to invest in the S&P 500 and let time do the work.
As of today, two dozen ETFs track the S&P 500. The most popular options are:
- SPDR S&P 500 ETF Trust (SPY 0.29%)
- Vanguard S&P 500 ETF (VOO 0.29%)
Both ETFs hold all 503 stocks in the S&P 500 (yes, 503—some companies have multiple share classes). The only difference? Their expense ratios:
- SPDR S&P 500 ETF Trust: 0.09%
- Vanguard S&P 500 ETF: 0.03%
That small 0.06% difference in fees might not seem like much, but it adds up over time. For example:
If you invested $1 million in each fund and earned an annualized 7% return over 20 years:
- SPDR S&P 500 ETF: $3,805,105
- Vanguard S&P 500 ETF: $3,848,043
That’s a $43,000 difference—just from lower fees. Since both funds track the same index, the Vanguard S&P 500 ETF (VOO) is the smarter long-term choice.
Final Takeaway: Don’t Overthink It—Just Invest
The stock market will always have ups and downs, but history is clear: investing in the S&P 500 and holding for 20 years has always been profitable.
Instead of stressing over short-term swings, focus on what has worked 100% of the time for more than a century. Investing in a low-cost S&P 500 ETF and holding for the long haul is the closest thing you’ll find to a Wall Street guarantee.
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