Excess Returns The Average Return That Never Comes | Sam Ro on 10 Stock Market Truths Investors Get Wrong
Sep 20, 2025
Sam Ro, a financial writer and author of '10 Stock Market Truths,' joins the discussion to challenge common market misconceptions. He highlights why long-term investing triumphs over short-term volatility and debunks the myth of average returns. Ro emphasizes the significance of earnings as a key driver of stock prices and warns about unrecognized risks. He also explores the dual nature of AI in markets and clarifies that stock market trends don't always reflect the broader economy. Tune in for valuable insights to navigate today's market!
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Long-Term Market Wins Despite Noise
- The long-term trend of equities historically wins despite frequent short-term noise.
- Sam Ro urges focusing on multi-year horizons rather than daily headlines.
Prepare For Inevitable Short-Term Drawdowns
- Fasten your 'stock market seat belts' because intra-year drawdowns are normal and frequent.
- Prepare a battle plan in advance so you avoid panicking and selling during big drawdowns.
The 'Average' Return Is Misleading
- The headline '8–10% average return' misleads because year-to-year returns cluster into big gains or losses.
- In positive years the S&P often returns ~20% and in negative years ~-9% to -10% on average.