Variability of U.S. Stock Market Returns

How should the variability of stock market returns shape the outlooks of short-term traders and long-term investors? How strong is the tailwind of the general drift upward in stock prices? How powerful is the turbulence of variability? Does the tailwind ever overcome the turbulence? To investigate we consider all holding periods for the S&P 500 Index ranging from one week to 208 weeks (about four years). Using weekly closes for the index during January 1928 through mid-March 2022 (4,915 weeks or about 94 years), we find that:

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