Rolling Returns vs. Average Annual Returns

Here is the article.

Interesting paragraph to read:

Nassim Taleb, in his book The Black Swan (Penguin, 2008), has a section called “Don’t cross a river if it is (on average) four feet deep.” It is a statement worth pondering. Most financial projections use averages. There is no guarantee that your investments will achieve the average return. 

Volatility is the variation of returns from their average. For example, from 1926–2015, historical stock market returns—as measured by the S&P 500 Index—averaged 10% a year. But that average encompassed years where it was down 43.3% (1931) and up 54% (1933), as well as more recent years like 2008 when it was down 37%, and 2009 when it went up 26.5%*.


A ten-year rolling return would show you the best ten years and worst ten years you may have experienced by looking at the ten year periods not just starting with January, but also starting February 1, March 1, April 1, or any other date.

Facts: 

the S&P 500 Index
down 43.3% (1931) 
up 54% (1933)
down 37% (2008)
up 26.5% (2009)