Historical Performance Trends

S&P 500 seasonality for the first ten and last ten sessions of the month during U.S. Presidential election years (1928 to present) 💡Performance Trends May through October typically shows weaker performance, with May having the worst first 10-day period of the year (-0.68% average return). August stands out as a month where the first 10 days show a relatively strong return (0.81%) before weakening in the last 10 days (-0.23%). November and December are historically strong months, with significant gains in both the first and last 10 days. December’s last 10 days show an average return of 0.49%. 💡Election-Year Volatility Standard deviations indicate the level of volatility. September’s first 10 days have a higher standard deviation (4.09%), implying more volatility during this period, potentially due to uncertainty in the markets during election periods. 💡Percentage of Positive Sessions December’s last 10 days have the highest likelihood of positive returns (66.67% of the time up). August and September see lower percentages of positive days, reflecting weaker performance in the months leading up to elections. 💡Notable Patterns A major trend highlighted is that the market struggles from late August through mid-October but rallies into year-end, a post-election trend. This table is useful for gauging historical patterns and volatility during U.S. presidential election years, showing that November and December typically provide strong gains for the S&P 500, which is helpful for strategizing market positions in these months.

Past Performance Does Not Guarantee Future Results: (But It Usually Does). Despite the standard disclaimer that “past performance does not guarantee future results,” empirical data suggests that when evaluating private equity and private credit funds, past performance is indeed indicative of future results. Research by a leading investment consultant and a top-tier private markets data provider shows top-quartile managers tend to deliver strong performance in subsequent funds, especially when the observed manager has demonstrated such results in consecutive fund vintages. One study analyzing over 1,400 fund families found that top-quartile results are highly repeatable, particularly when they have demonstrated this track record over a six-year period that include 2 successive fund vintages. Another analysis of more than 1,700 funds confirmed that top-quartile managers consistently outperform their mean peers in subsequent vintages. This persistence isn’t coincidence. It reflects institutional advantages: experienced and highly motivated investment teams, repeatable investment processes, disciplined underwriting and structuring expertise, economic alignment, and proprietary deal sourcing networks. These strengths create structural edge, and that edge compounds generating alpha and absolute returns that consistently outperforms relevant benchmarks across market cycles. Sophisticated allocators and investment consultants evaluate performance holistically, assessing not just IRR, but also MOIC and DPI, which I call the tri-vector of investment performance. While a firm’s infrastructure, risk management, culture, are all important, the three dimensions of performance (IRR, MOIC, DPI) will always represent the cornerstone by which investment managers are measured. The Investment Advisors Act of 1940 requires that performance advertising by registered investment advisors (PE and PC operating in the U.S.) included relevant disclosure and disclaimers when marketing fund offerings, most sophisticated investors rely on historical performance for a reason. While there are no guarantees in life beyond death and taxes, when it comes to manager selection, track record matters. I believe that the strongest predictor of future outperformance is an alternative asset manager with all the requisite skills who has consistently done it before.

History shows that single-family home values have held up well through recessions and periods of rising interest rates. Some of this performance is owed to structural factors: housing is a necessity good primarily financed with long-term, fixed-rate mortgages. But cyclical factors also play a role: demographic trends and periods of undersupply have made home values more resilient at different points in history. During the spike in rates and subsequent recessions of the early 1980s, values avoided a material drop. Baby Boomers starting families and buying homes and rising labor force participation among women counteracted the negative pressure of higher interest rates and a weaker economy. The GFC was the notable exception to this rule as the market faced oversupply in certain markets, elevated levels of speculative activity, and loose lending standards that pulled younger households and those without the financial security to weather a deep, negative economic event into ownership. The performance of commercial properties as measured by appreciation in the NCREIF Property Index tells a more checkered story through cycles. But a direct comparison is unfair as NCREIF appreciation is measured after capital expenditures. To create a more apples-to-apples comparison, I adjusted home price appreciation down by 0.3% each quarter for a negative capex drag of 1.2%-1.3% per year. The resulting home price index is shown in the chart below. Home prices still significantly outperform value growth in the NPI. Over the past 30 years, the FHFA’s all-transaction home price index adjusted for capex had a 3.2% CAGR, while NPI values had a 2.0% CAGR. NPI apartment values came in at a 2.9% CAGR. I’m dropping a detailed table in the comments below, but the long-term underperformance in office and retail is considerable and values in those sectors declined over the past 15 years. Industrial is the clear standout. Long-term hold investors should be thinking about these trends as they adjust allocation targets for the years ahead. Certainly, all property sectors have deal-specific and cyclical opportunities to create outsized returns, but when it comes to durable performance over time, single-family housing is hard to beat. I also expect we will see large, professional, SFR investors further reduce capex drag over time, while there is reason to expect that commercial assets will become even more capital intensive as they seek to stay relevant to existing and prospective tenants. How are you thinking about property values and capex across your portfolio in the years ahead? #sfr #btr #housing #roofstock

𝐖𝐡𝐚𝐭 𝐢𝐟 𝐞𝐚𝐫𝐥𝐲 𝐟𝐮𝐧𝐝 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬𝐧’𝐭 𝐭𝐞𝐥𝐥𝐢𝐧𝐠 𝐮𝐬 𝐰𝐡𝐚𝐭 𝐰𝐞 𝐭𝐡𝐢𝐧𝐤 𝐢𝐭 𝐢𝐬? Allocators often lean heavily on historical fund performance - especially mid-cycle metrics like TVPI and IRR - as proxies for long-term outcomes. But StepStone Group's SPI dataset shows a far more dynamic reality: early “leaders” don’t always stay leaders, early “laggards” aren’t doomed, and much reshuffles between Year 5 and Year 10 as winners compound and markdowns land. About 12 months ago, StepStone Group published an impressive analysis examining whether Year 5 Net TVPI quartiles predicted Year 10 results. Though that work was hugely valuable, my mind went immediately to a broader question: 𝐧𝐨𝐭 𝐣𝐮𝐬𝐭 𝐡𝐨𝐰 𝐘𝐞𝐚𝐫 𝟓 𝐓𝐕𝐏𝐈 𝐩𝐞𝐫𝐬𝐢𝐬𝐭𝐬, 𝐛𝐮𝐭 𝐡𝐨𝐰 𝐃𝐏𝐈 𝐛𝐞𝐡𝐚𝐯𝐞𝐬 - and whether either metric offers meaningful early signal for Year 10 outcomes. Thanks to my good friend Frank Coppola and his team, they recreated the same 4×4 matrix for DPI and graciously allowed me to share the data here, along with my perspectives for GPs and LPs. 𝐊𝐞𝐲 𝐈𝐧𝐬𝐢𝐠𝐡𝐭𝐬 🔍 1️⃣ 𝐃𝐏𝐈 𝐜𝐚𝐩𝐭𝐮𝐫𝐞𝐬 𝐫𝐞𝐚𝐥 𝐯𝐚𝐥𝐮𝐞, 𝐦𝐚𝐤𝐢𝐧𝐠 𝐢𝐭 𝐟𝐚𝐫 𝐦𝐨𝐫𝐞 𝐬𝐭𝐚𝐛𝐥𝐞 𝐭𝐡𝐚𝐧 𝐓𝐕𝐏𝐈. Year 5 DPI correlates more tightly with Year 10 outcomes because it reflects realized or partially realized cashflows, not interim marks. This is why 𝟔𝟑% of top-quartile DPI funds stay top quartile, compared with only 𝟒𝟗% for TVPI. 2️⃣ 𝐄𝐚𝐫𝐥𝐲 𝐃𝐏𝐈 𝐫𝐞𝐰𝐚𝐫𝐝𝐬 𝐩𝐚𝐜𝐢𝐧𝐠 𝐝𝐢𝐬𝐜𝐢𝐩𝐥𝐢𝐧𝐞 𝐚𝐧𝐝 𝐞𝐚𝐫𝐥𝐢𝐞𝐫 𝐥𝐢𝐪𝐮𝐢𝐝𝐢𝐭𝐲. Strong Year 5 DPI often signals thoughtful use of secondaries, early M&A, or trimming positions in breakout companies. TVPI can inflate on markups, but DPI shows who is converting progress into actual distributions. 3️⃣ 𝐃𝐏𝐈 𝐞𝐱𝐩𝐨𝐬𝐞𝐬 𝐭𝐡𝐞 𝐭𝐫𝐮𝐞 𝐝𝐢𝐬𝐩𝐞𝐫𝐬𝐢𝐨𝐧 𝐨𝐟 𝐥𝐚𝐭𝐞-𝐜𝐨𝐦𝐩𝐨𝐮𝐧𝐝𝐢𝐧𝐠 𝐰𝐢𝐧𝐧𝐞𝐫𝐬. The wide spread of outcomes from bottom-quartile DPI funds - including 𝟐𝟐% that jump all the way to top quartile - reflects how long many outliers take to crystallize. Unlike TVPI, where bottom-quartile funds rarely escape the basement, DPI uncovers how long-duration compounding can redefine a fund’s trajectory. 4️⃣ 𝐃𝐏𝐈’𝐬 𝐭𝐨𝐩-𝐪𝐮𝐚𝐫𝐭𝐢𝐥𝐞 𝐩𝐞𝐫𝐬𝐢𝐬𝐭𝐞𝐧𝐜𝐞 𝐜𝐫𝐞𝐚𝐭𝐞𝐬 𝐚 𝐦𝐞𝐚𝐧𝐢𝐧𝐠𝐟𝐮𝐥 𝐬𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐜 𝐜𝐨𝐧𝐬𝐢𝐝𝐞𝐫𝐚𝐭𝐢𝐨𝐧 𝐟𝐨𝐫 𝐆𝐏𝐬. If early DPI is strongly correlated with long-term performance, managers may choose to return liquidity to LPs rather than recycle those dollars into new or breakout companies - even though recycling can materially enhance terminal returns. Ultimately, early marks provide signal but not enough to underwrite decisions on their own. What matters most is how a fund is constructed, how it is structurally positioned to outperform when things go right, and whether the manager can consistently access and win allocations into the best founders. 𝐒𝐢𝐠𝐧𝐚𝐥𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐍𝐨𝐢𝐬𝐞 🤓

Over the last 26 years of Nifty 50 return data (2000–2026), an interesting behavioural pattern emerges. 📉 The January–February–March period has historically shown higher volatility, often driven by: • Global macro resets • Union Budget expectations • FII allocation changes • Year-end portfolio rebalancing • Earnings season uncertainties This pattern appears again in 2026, where the year has started with negative returns in January (-3.16%) and February (-0.56%). However, a deeper look at the historical matrix highlights an important strategic insight: ✅ Short-term volatility has rarely disrupted long-term wealth creation. Despite multiple crises: • Dot-com crash (2000–2001) • Global Financial Crisis (2008) • Eurozone stress (2011) • Pandemic crash (2020) The Nifty 50 has delivered ~11.42% annualised return since inception, reinforcing the long-term structural growth story of Indian equities. 📊 Current Market Snapshot • Nifty PE: 22.75 • PB Ratio: 3.55 • Dividend Yield: 1.28% • Std. Deviation: 22.55 Disclaimer: The above analysis is based on historical data of the Nifty 50 index from 2000 to 2026 and is intended solely for educational and research purposes. Past performance and historical patterns do not guarantee future returns. Investors should consider their risk profile, financial goals, and consult with a qualified financial advisor before making investment decisions. #Nifty50 #StockMarketIndia #MarketCycles #EquityInvesting #DataDrivenInvesting #IndianMarkets

The U.S. stock market has outperformed non-U.S. stocks for over 50 years, and the magnitude of U.S. outperformance has increased in the past decade. Why would you invest in stocks outside the U.S. when the U.S. stock market has been so dominant? Diworsification is the term for adding an investment to one’s portfolio that lowers the return while keeping the risk the same. That’s what investing in non-U.S. stocks has been like for the past two decades. But that doesn’t mean it will remain that way. An allocation to non-U.S. stocks, such as $VEA and $VXUS, may have its advantages for three important reasons: 1. U.S. stocks have not always outperformed non-U.S. stocks 2. Non-U.S. stocks pay out higher dividends 3. Valuation and currency trends that favored U.S. stock market outperformance could reverse. Let’s look closer at each point. Non-U.S. stocks have not always outperformed the U.S. stock market. For example, non-U.S. stocks outpaced U.S. stocks for 35 years, from 1969 to 2004. Despite that 35-year period of non-U.S. stock outperformance, U.S. stocks have outperformed non-U.S. stocks by such a large degree over the past decade that U.S. stocks are now ahead, going back to at least 1969. Let’s take a closer look at the past decade to see what drove U.S. stock market dominance. Historical stock returns can be broken into four primary drivers: dividends, earnings growth, valuation changes, and currency impact. While the U.S. has grown its earnings per share faster than non-U.S. stocks over the past decade  (7.3% versus 5.4%), non-U.S. stocks have paid out a higher percentage of profits in dividends. The dividend contribution for non-U.S. stocks has been 3.1% annualized over the past decade compared to 1.8% for non-U.S. stocks. If we combine earnings and dividends and ignore currency and valuation changes, U.S. stocks returned 9.1% annualized over the past decade compared to 8.5% for non-U.S. stocks. The U.S. outperformed non-U.S stocks but not by much. Over the past decade, two big drivers of U.S. stock market outperformance are U.S. stocks have gotten more expensive, and the U.S. dollar is stronger. More expensive valuations contributed 3.4% annualized to U.S. stock market performance over the past decade. Cheaper valuations detracted 0.8% annualized for non-U.S. stocks. A second detractor for non-U.S. stocks is the U.S. dollar has strengthened by 21% over the past decade, resulting in a 2.2% annualized drag when non-U.S. stock returns are converted into U.S. dollars. What has to happen for U.S. stocks to continue to outperform non-U.S. stocks? An investment in U.S. stocks such as $SPY and $VTI will continue to outperform if U.S. stocks can grow earnings per share by 1.3 percentage points faster than non-U.S. stocks in order to offset the higher dividend yield of non-U.S. stocks. U.S. stocks also can’t see their valuations fall from their lofty levels, as lower valuations would detract from U.S. returns.

The research for this post sort of blew my mind. We hear a lot about the dominance of the US stocks compared to their international peers. So, here's a question for you. In how many of the past 20 years did US equities achieve the highest performance compared other developed markets? One. (2014) Top performers each year... 2004- Austria (+71.5%) 2005- Canada (+28.3%) 2006- Spain (+49.4%) 2007- Finland (+48.7%) 2008- Japan (-29.2%) 😰 <--- A very bad year indeed 2009- Norway (+87.1%) 2010- Sweden (+33.8%) 2011- Ireland (+13.7%) 2012- Belgium (+39.6%) 2013- Finland (+46%) 2014- USA (+12.7%) 🇺🇸 🇺🇸 🇺🇸 2015- Denmark (+23.4%) 2016- Canada (+24.6) 2017- Austria (+58.3%) 2018- Finland (-3.4%) 2019- New Zealand (+38.2%) 2020- Denmark (+43.7%) 2021- Austria (+41.5%) 2022- Portugal (+.2%) 2023- Italy (+37.1%) Which country is going to outperform next year? I have no idea. That's why I own them all. (By the way, if you include emerging markets in this analysis, the answer to the trivia question is ZERO. Egypt posted a +29.3% return in 2014) Source data: MSCI DISCLOSURE: This analysis uses historical MSCI index data to examine global equity market performance from 2004-2023. Past performance does not predict future returns. This is for informational purposes only and should not be considered investment advice.

The Most Reliable Predictor of Future Market Returns? When household enthusiasm for equities reaches an extreme, history offers a clear warning. The chart below tracks U.S. household financial asset allocation since 1960. Equity ownership is now near record highs, 52%, exceeding even the peaks of the Internet Bubble and the late-1960s Nifty Fifty era. That matters because household equity exposure has historically been inversely correlated with future market returns. In the late 1970s, when stocks were deeply out of favour, household equity exposure was at multi-decade lows — setting the stage for the greatest bull market in history. By contrast, the euphoric peaks of the late 1920s, late 1960s, and 1999 were followed by prolonged periods of poor performance. Investor psychology always swings between fear and euphoria. Today, it’s clear which side dominates. Periods of extreme optimism have never been permanent, they’ve merely preceded volatility, rotation, and opportunity for the disciplined investor. 👉 Each Tuesday, I share a free market commentary that helps investors cut through the noise, identifying the behavioural and historical patterns shaping risk and opportunity. You can sign up and access free sample issues of the Global Investment Letter here: 🔗 https://lnkd.in/g2mBz8fJ #marketcycles #investorbeahviour #globalmarkets

Historically, each cycle the stock market leadership changes between the US and International (EAFE) for both fundamental and behavioral reasons. So what is going on with this new cycle being led by the US again? On a cap-weighted basis the US is outperforming, but on an equal-weighted basis EAFE is outperforming. That is unusual since both cap and equal weighted relative performance have typically trended in the same direction. As the cycle matures it may be that the broad outperformance by the average stock reflected in the equal-weighted indexes eventually shows up in cap-weighted outperformance by international.

Impact of Equity Risk Premium on the S&P 500 The valuation of the S&P 500 is closely linked to the Equity Risk Premium (ERP), nominal economic growth, and investor sentiment. I explore potential market movements under different ERP scenarios, historical trends of market corrections, and projected valuation changes through 2025-2026. Scenario 1: ERP Tends to Average Implied ERP (Last Decade) 5% - 5.2%. Impact on Market: If the ERP rises to this level, the market will experience a 16% drop in valuation. This moderate rise reflects an increase in perceived risk but aligns with recent historical averages, suggesting a substantial but manageable decline. Scenario 2: ERP Reaches Historical High (1960–Current) 6% - 6.4%. Impact on the Market: A shift to this level would lead to a 30% drop in the S&P 500, indicating a significant decline in valuations as investor risk aversion increases. Even with stable nominal growth, a high equity risk premium (ERP) reflects severe market uncertainty and greatly undermines valuation levels. Historical Market Corrections: Over the past several decades, the S&P 500 has experienced predictable patterns of drawdowns. Average annual drawdowns usually range between 10% and 15% in a calendar year. These corrections are viewed as normal and reflect periodic adjustments in market sentiment. Market Corrections: Declines of 10% or more occur roughly every 1 to 2 years, driven by macroeconomic events, geopolitical developments, or earnings revisions. Bear Markets: Drops of 20% or more (official bear markets) happen less frequently, approximately every 6 to 10 years, often linked to recessions or systemic crises. The history of the #SP500 shows that blindly relying on past performance can lead to strategic mistakes. The belief that "there is no risk" is a trap that has caught many investors. True wisdom lies in staying vigilant and disciplined. Benjamin Graham, the father of value investing, emphasized the importance of the margin of safety—a critical tool to guard against uncertainty and inherent risks. This strategy involves purchasing assets below their intrinsic value, creating a cushion for potential miscalculations or market fluctuations. According to George Soros, high volatility over short time frames indicates that an active investment approach can be beneficial. This strategy involves decreasing exposure during periods of excessive market optimism and increasing it during times of pessimism, utilizing the concept of reflexivity in market valuations. Such an active strategy can help maximize gains by aligning with market cycles. #CAPE is indicating a situation similar to that of 1999-2000, with a significantly negative risk premium at levels comparable to that time. For more information, please visit the following link: https://lnkd.in/di5UAYWj #stockmarket #economy #finance #Corporatefinance