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Stock Market Returns Over Different Time Periods (1872-2018)

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Putting hard-earned money in the stock market can make some people nervous.

It’s well known that a correction can occur at any time, and the fear of market crashes can make even the most seasoned investors to make questionable decisions.

While it’s true that putting your money on the line is never easy, the historical record of the stock market is virtually irrefutable: U.S. markets have consistently performed over long holding periods, even going back to the 19th century.

Market Performance (1872-2018)

Today’s animation comes to us from The Measure of a Plan, and it shows the performance of the U.S. market over different rolling time horizons using annualized returns.

Note: The animation uses real total returns from the S&P Composite Index from 1872 to 1957, and then the S&P 500 Index from 1957 onwards. Data has been adjusted for reinvestment of dividends as well as inflation.

Animation: Stock Market Returns Over Different Time Periods (1872-2018)

Using just one-year intervals of time, the market can be a crapshoot. Unfortunately, if you were to just choose a one-year period at random, there would be a significant chance of losing money.

However, as the timeframes get longer – the animation goes to 5-year, 10-year, and then 20-year rolling periods – the frequency of losses rapidly decreases. By the time you get to the 20-year windows, there isn’t a single instance in which the market had a negative return.

Why Time Matters

Over 146 years of data, the chance of seeing negative returns for any given year is about 31%.

That fact in itself is quite alarming, but even more important to note is the distribution of returns in those down years. As you can see in the following chart also from The Measure of a Plan, it’s not uncommon for a down year to skew in the high negatives, just as it did during the crisis of 2008:

1 year stock market return distributions

According to the data, there have been 10 individual years where the market has lost upwards of 20% – and while those off years are greatly outnumbered by the years with positive returns, it makes it clear that timeframe matters.

Past performance obviously doesn’t guarantee future results, but the historical track record in this case is quite robust.

Long-term investors can see that as long as their time horizon is measured in the decades, you can take the odds of making money in the stock market to the bank.

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Markets

How Total Spend by U.S. Advertisers Has Changed, Over 20 Years

This graphic visualizes the fluctuations in advertising spend in the U.S., along with its brutal decline of 13% as a result of COVID-19.

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Total Spend by U.S. Advertisers, Over 20 Years

With an advertising economy worth $239 billion in 2019, it’s safe to say that the U.S. is home to some of the biggest advertising spenders on the planet.

However, the COVID-19 pandemic has resulted in the major upheaval of advertising spend, and it is unlikely to recover for some time.

The graphic above uses data from Ad Age’s Leading National Advertisers 2020 which measures U.S. advertising spend each year, and ranks 100 national advertisers by their total spend in 2019.

Let’s take a look at the brands with the biggest budgets.

2019’s Biggest Advertising Spenders

Much of the top 10 biggest advertising spenders are in the telecommunications industry, but it is retail giant Amazon that tops the list with an advertising spend of almost $7 billion.

In fact, Amazon spent an eye-watering $21,000 per minute on advertising and promotion in 2019, making them undeniably the largest advertising spender in America.

Explore the 100 biggest advertisers in 2019 below:

RankCompanyTotal U.S. Ad Spend 2019Industry
#1Amazon$6.9BRetail
#2Comcast Corp.$6.1BEntertainment
#3AT&T$5.5BTelecommunications
#4Procter & Gamble$4.3BConsumer Goods
#5Walt Disney$3.1BEntertainment
#6Alphabet$3.1BTechnology
#7Verizon Communications$3.1BTelecommunications
#8Charter Communications$3.0BTelecommunications
#9American Express$3.0BFinancial Services
#10General Motors$3.0BAutomotive
#11JPMorgan Chase$2.8BFinancial Services
#12Walmart$2.7BRetail
#13L’Oréal$2.3BBeauty
#14T-Mobile U.S.$2.3BTelecommunications
#15Berkshire Hathaway$2.3BVarious
#16Nestlé$2.3BFood & Beverages
#17Ford$2.3BAutomotive
#18Expedia Group$2.2BTravel & Hospitality
#19Capital One Financial$2.2BFinancial Services
#20Fiat Chrysler Automobiles$2.0BAutomotive
#21Samsung$2.0BElectronics
#22Pfizer$1.9BPharmaceuticals
#23Progressive$1.8BInsurance
#24PepsiCo$1.7BFood & Beverages
#25Bank of America$1.7BFinancial Services
#26LVMH$1.6BRetail
#27Target$1.6BRetail
#28McDonald’s$1.6BFood & Beverages
#29Booking Holdings$1.6BTravel & Hospitality
#30GlaxoSmithKline$1.5BPharmaceuticals
#31Johnson & Johnson$1.5BPharmaceuticals
#32Anheuser-Busch InBev$1.5BFood & Beverages
#33Toyota$1.5BAutomotive
#34Merck & Co.$1.5BLogistics
#35Nike$1.5BRetail
#36AbbVie$1.4BPharmaceuticals
#37Honda$1.4BAutomotive
#38Unilever$1.4BConsumer Goods
#39ViacomCBS$1.4BEntertainment
#40Macy’s$1.3BRetail
#41State Farm$1.2BInsurance
#42Kohl’s$1.2BRetail
#43Home Depot$1.1BRetail
#44Wells Fargo$1.1BFinancial Services
#45Yum Brands$1.1BFood & Beverages
#46Netflix$1.1BEntertainment
#47U.S. Government$1.0BGovernment
#48Estée Lauder$994MBeauty
#49Nissan$990MAutomotive
#50Wayfair$932MRetail
#51Diageo$918MFood & Beverages
#52Sanofi$889MPharmaceuticals
#53Discover Financial Services$883MFinancial Services
#54Mars$880MFood & Beverages
#55Eli Lilly$864MPharmaceuticals
#56Kroger$854MRetail
#57Allstate$854MInsurance
#58Molson Coors$822MFood & Beverages
#59Apple$818MTechnology
#60Microsoft$816MTechnology
#61Coca-Cola$816MFood & Beverages
#62DISH Network$815MEntertainment
#63Lowe’s$811MRetail
#64Kraft Heinz$782MFood & Beverages
#65Volkswagen$780MAutomotive
#66IAC$775MEntertainment
#67Best Buy$772MRetail
#68Intuit$760MTechnology
#69Uber$756MTechnology
#70Constellation Brands$749MFood & Beverages
#71Sony$746MTechnology
#72Cox Enterprises$715MEntertainment
#73Citigroup$691MFinancial Services
#74Adidas$688MConsumer Goods
#75LendingTree$688MFinancial Services
#76Amgen$685MTechnology
#77Gilead Services$683MPharmaceuticals
#78Facebook$671MTechnology
#79Lions Gate$668MEntertainment
#80Marriott International$667MTravel & Hospitality
#81EssilorLuxottica$665MConsumer Goods
#82J.C. Penney$644MRetail
#83Liberty Mutual$640MInsurance
#84Daimler$640MAutomotive
#85Hyundai$627MAutomotive
#86Walgreens$621MRetail
#87Dell$618MTechnology
#88IBM$606MTechnology
#89Reckitt Benckiser$593MConsumer Goods
#90Keurig Dr Pepper$593MFood & Beverages
#91Restaurant Brands International$589MFood & Beverages
#92Inspire Brands$589MFood & Beverages
#93Clorox$581MConsumer Goods
#94Novartis$579MPharmaceuticals
#95eBay$562MRetail
#96Gap$562MRetail
#97Takeda$541MPharmaceuticals
#98Kia Motors$534MAutomotive
#99Coty$531MBeauty
#100Subarau$532MAutomotive

The report offers several ways of looking at this data—for example, when looking at highest spend by medium, Procter & Gamble comes out on top for traditional media spend like broadcast and cable TV.

On the digital front, Expedia Group is the biggest spender on desktop search, while Amazon tops the list for internet display ads.

The Rise and Fall of Advertising Spend

Interestingly, changes in advertising spend tend to fall closely in step with broader economic growth. In fact, for every 1% increase in U.S. GDP, there is a 4.4% rise of advertising that occurs in tandem.

The same phenomenon can be seen among the biggest advertising spenders in the country. Since 2000, spend has seen both promising growth, and drastic declines. Unsurprisingly, the Great Recession resulted in the largest drop in spend ever recorded, and now it looks as though history may be repeating itself.

Total advertising spend in the U.S. is estimated this year to see a brutal decline of almost 13% and is unlikely to return to previous levels for a number of years.

The COVID-19 Gut Punch

To say that the global COVID-19 pandemic has impacted consumer behavior would be an understatement, and perhaps the most notable change is how they now consume content.

With more people staying safe indoors, there is less need for traditional media formats such as out-of-home advertising. As a result, online media is taking its place, as an increase in spend for this format shows.

But despite marketers trying to optimize their media strategy or stripping back their budget entirely, many governments across the world are ramping up their spend on advertising to promote public health messages—or in the case of the U.S., to canvass.

The Saving Grace?

Even though advertising spend is expected to nosedive by almost 13% in 2020, this figure excludes political advertising. When taking that into account, the decline becomes a slightly more manageable 7.6%

Moreover, according to industry research firm Kantar, advertising spend for the 2020 U.S. election is estimated to reach $7 billion—the same as Amazon’s 2019 spend—making it the most expensive election of all time.

Can political advertising be the key to the advertising industry bouncing back again?

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Technology

Visualized: A Breakdown of Amazon’s Revenue Model

Here’s a look at the different parts of Amazon’s revenue model, and how much money each business segment makes.

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Visualized: A Breakdown of Amazon’s Revenue Model

Amazon has evolved into more than just an online store. While ecommerce makes up a significant portion of the company’s overall sales, its diverse revenue model generates billions through various business segments.

This visualization provides an overview of the different parts that make up Amazon, showing each business unit’s net sales from June 2019 to 2020.

A Diverse Revenue Model

With a market cap of $1.7 trillion, Amazon is currently the most valuable retailer in the world. The company is expected to account for 4.6% of total U.S. retail sales by the end of 2020—but the tech giant is more than just a one-trick pony.

A key factor in the company’s success is its diversification into other areas. Here’s a breakdown of Amazon’s revenue mix:

Business SegmentNet Sales (June 2019 - 2020)
Online stores$163 B
Third-party selling services$63 B
Amazon Web Services$40 B
Subscription services$22 B
Physical stores$17 B
Other$17 B
Total Revenue$322 billion

While Amazon is truly more than an online store, it’s worth noting that online sales account for a significant amount of the company’s overall revenue mix. Over the period of June 2019 to 2020, product sales from Amazon’s website generated $163 billion, which is more than the company’s other business units combined.

A significant day for online sales is Prime Day, which has grown into a major shopping event comparable to Black Friday and Cyber Monday. In 2020, Prime Day is projected to generate almost $10 billion in global revenue.

While ecommerce makes up a large portion of Amazon’s overall sales, there are many other segments that each generate billions in revenue to create immense value for the tech giant. For instance, enabling third-party sellers on the platform is the company’s second-largest unit in terms of net sales, racking up $63 billion over the course of a year.

This segment has shown tremendous growth over the last two decades. In 2018, it accounted for 58% of gross merchandise sales on Amazon, compared to just 3% in 2000. While third-party sellers technically outsold Amazon itself, the company still makes money through commission and shipping fees.

Amazon is Not Alone: Diversification is Common

Amazon isn’t the only major tech company to benefit from diverse revenue streams.

Other tech giants generate revenue through a range of products, services, and applications—for instance, while a healthy portion of Apple’s revenue comes from iPhone sales, the company captures 17% of revenue from a mix of services, ranging from Apple Pay to Apple Music. Microsoft is another example of this, considering it owns a wide range of hardware, cloud services, and platforms.

While there are several reasons to build a diverse business portfolio, a key benefit that comes from diversification is having a buffer against market crashes. This has proven to be particularly important in 2020, given the economic devastation caused by the global pandemic.

The Sum of its Parts

Despite varying levels of sales, each business unit brings unique value to Amazon.

For instance, while Amazon Web Services (AWS) falls behind online sales and third-party sellers in net sales, it’s one of the most profitable segments of the company. In the fourth quarter of 2019, more than half of Amazon’s operating income came from AWS.

In short, when looking at the many segments of Amazon, one thing is clear—the company is truly the sum of its parts.

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