Consider the following:
- Investor A starts investing on June 2, 1998 and continues investing yesterday. That investor saw no durable lift, other than dividends, in the stock market for all 12 years (there has, of course, been a wide trading range) of his career.
- Investor B was lucky enough to start a similar career exactly 12 years earlier on June 2, 1986 and manages money for the same amount of time, 12 years, getting out of the business on June 2, 1998. In sharp contrast, Investor B saw the S&P go from 245 to 1093 during his career. A 15%+ annualized return including dividends could have been achieved just buying the Vanguard Index 500 fund during that time frame.
10%/year long-term returns in equities has been the norm. That fact masks the following: the market historically goes through long periods of going sideways (often 15-20 years) before embarking on periods of explosive growth like the 80's and 90's. Examples of long-term sideways markets include 1965-1982 and possibly 2000-????*.
So the long-term average return of 10% doesn't tell you much if your investing horizon is not truly very long-term.
* In just over 80 years we've essentially had the following: [~1929-1946 sideways market], [~1946-1965 bull market], [~1965-1982 sideways], [~1982-2000 bull market], and [~2000-??? sideways].