The Pyramid of Equity Returns chart provides a comprehensive view of the historical performance of U.S. stocks over nearly two centuries. The data is organized into ranges of annual returns, highlighting the frequency of each range. Notably, the most common range is between 0% to 10%, with 46 occurrences, indicating a tendency for moderate positive returns. The chart also reveals significant historical events, such as the Great Depression and the Global Financial Crisis, which resulted in some of the largest stock market losses, with returns falling between -50% to -40% and -40% to -30%. Interestingly, the chart shows that extreme positive returns, such as those between 50% to 60%, are rare, occurring only five times. This distribution suggests that while the stock market can experience significant volatility, extreme losses and gains are less common than moderate returns. The chart's bell curve shape underscores the normal distribution of equity returns, with most years clustering around the central peak. This visualization provides valuable insights for investors, emphasizing the importance of understanding historical trends and the potential for both risk and reward in the stock market.
