In the past 12 months, the S&P 500 has risen over 40%, with a Sharpe ratio exceeding 3, making it one of the highest annual risk-adjusted return years in history. Goldman Sachs pointed out that this has only occurred four times in history, specifically in 1995, 1997, and 2018. Despite the strong past performance, Goldman Sachs trader Brian Garrett cautioned that past performance does not guarantee future returns
Today, the S&P 500 completed a rare feat, which has only occurred four times in history.
Data shows that over the past 12 months, the S&P 500 has risen more than 40% from its low in October 2023 to its high in October 2024.
Analysis indicates that this increase was achieved with an actual volatility of about 12%, and the "Sharpe ratio" even exceeded 3. Goldman Sachs' charts show that this situation is extremely rare in history, having only occurred four times, specifically in 1995, 1997, and just before the "volatility apocalypse" in 2018.
In other words, the past year has been one of the highest years for risk-adjusted annual returns in the history of the S&P 500, and there has been hardly a more effortless period for passive investing.
Goldman Sachs trader Brian Garrett stated that over the past year, hedge strategies have not been effective. With the exception of a few two-day instances, it has been nearly impossible to profit from any type of stock hedge. He also cautioned that past performance does not guarantee future returns.
However, the annual returns of the S&P 500 after 1995 and 1997 were also impressive: 34% in 1995, 20.2% in 1996, 31% in 1997, and 26.6% in 1998. This suggests that low volatility increases do not necessarily indicate future volatility