Blogger Ben Carlson: Mean Reversion Is Inevitable but Timing Is Unpredictable — Lowering Expectations Is a Win-Win
Blogger Ben Carlson uses rolling S&P 500 return data to show that above-average cycles can persist for a long time; the direction of mean reversion is certain but its timing is not. He suggests that even if the bull market still has some years left, reining in return expectations is not a bad thing — you are prepared if things go wrong, pleasantly surprised if they keep going.
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The S&P 500's annualized return over the past 15 years is 15.7%, while the long-term average over roughly the past 100 years is about 10%. In his October 18, 2026 post, blogger Ben Carlson lists annualized returns across various time frames: 20 years +11.2%, 30 years +10.3%, 40 years +11.5%, 50 years +11.9% — these longer periods have returned to near the average, but 15 years and shorter windows are squarely above it.
The math behind mean reversion is not complicated: if one period's returns persistently exceed the long-term average, subsequent periods are likely to fall below it so the overall average holds. Carlson's core point is about timing — 'mean reversion can take longer than you think.' Since the mid-2010s, investment professionals have been warning that high valuations would drag returns down, but the actual result over the past decade-plus has been the opposite.
To illustrate how long an above-average cycle can last, Carlson compares the S&P 500's annual returns from 1995 to 1999: 37.2%, 22.7%, 33.1%, 28.3%, 20.9% — that stretch came at the tail-end of a bull market lasting about two decades. Now look at returns since 2019: 2019 +31.2%, 2020 +18.0%, 2021 +28.5%, 2022 −18.0%, 2023 +26.1%, 2024 +24.9%, 2025 +17.8%, and 2026 +12.8% so far. Not a perfect one-for-one, but the current above-average run has already lasted a considerable time.
Carlson's answer to 'how much longer will this cycle last' is honest: nobody knows. He also reminds readers that the sample size is very small — the past century essentially contains three gigantic bull markets (including the current one) and three bone-crushing secular bear markets. Cycles may speed up, return paths may be more uneven; none of this is written in stone.