DIMENSIONAL QUICK TAKE
While daily news may challenge an investor’s discipline, stock markets have a long history of delivering growth that has created substantial wealth over time.
- Looking at monthly performance since 1926 for different areas of the US financial markets, stock returns have far exceeded inflation and significantly outperformed bond returns.
- But not all stocks and bonds are the same. US Treasury bills barely covered inflation, while long-term government bonds fared better, albeit well short of stocks’ performance. And US small cap stocks fared the best, beating US large cap stocks.
- Financial markets have steadily risen over the decades, weathering events like the 1929 crash, World War II, and the COVID pandemic.
Stocks and bonds have rewarded investors who can look past the headlines and remain disciplined over the long term.
Past performance is not a guarantee of future results. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio.
In USD. US Small Cap is the CRSP 6–10 Index. US Large Cap is the S&P 500 Index. US Long-Term Government Bonds is the Dimensional US 20-Year Treasury Index. US Treasury Bills is the IA SBBI US 30 Day TBill TR USD. US Inflation is measured as changes in the US Consumer Price Index. CRSP data is provided by the Center for Research in Security Prices, University of Chicago. S&P data © 2025 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Treasury bills data provided by Ibbotson Associates via Morningstar Direct. US Consumer Price Index data is provided by the US Department of Labor, Bureau of Labor Statistics. Data presented in the Growth of a Dollar chart is hypothetical and assumes reinvestment of income and no transaction costs or taxes. The chart is for illustrative purposes only and is not indicative of any investment.
Dimensional US 20-Year Treasury Index: February 1999–present: Compiled by Dimensional from Bloomberg securities data. Based on securities in the universe of the Bloomberg US Treasury Index, the index selects the bond with beginning-of-month maturity closest to 20 years. If there are two bonds with the same time to maturity, the most recently issued bond is selected. Rebalanced monthly. The index has been retrospectively calculated by Dimensional and did not exist prior to February 2025. Accordingly, results shown during the periods prior to February 2025 do not represent actual returns of the index. Other periods selected may have different results, including losses. Prior to February 1999: Morningstar Long-Term Government Bonds.
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Investment products: • Not FDIC Insured • Not Bank Guaranteed • May Lose Value
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