Equity Performance in the Long Run

Spring 2021, by the CIO office (NBC)


Investing in the stock market is akin to gambling at a casino. 


It is true that daily market fluctuations resemble a coin toss. Nevertheless, two fundamental reasons make investing completely different from gambling.

First, unlike the world of gambling, investing in the stock market is not a zerosum game, as evidenced by the positive median annualized return (red dotted line). In the long run, equity returns come from compagnies' ability to grow their earnings, not from other investors' misfortune.

Second, while gambling remains just as uncertain no matter how long you ''play'', the opposite occurs within equity markets, as evidenced by the narrowing range of outcomes over time (grey area). The longer one "play" (i.e. remains invested), the greater the chances are of converging towards the premium investors earn for bearing equity risk.

(data via Robert J. Shiller at http://www.econ.yale.edu/~shiller/data.htm)

The information contained herein was obtained from sources we believe to be reliable, but is not guaranteed by us and may be incomplete. The opinions expressed are based on our analysis and interpretation of this information and are not to be construed as a solicitation or offer to buy or sell the securities mentioned herein. The opinions expressed herein are those of the author and do not necessarily reflect those of National Bank Financial.


The securities or investment sectors mentioned herein are not suitable for all types of investors. Please consult your investment advisor to verify whether the securities or sectors suit your investor's profile as well as to obtain complete information, including the main risk factors, regarding those securities or sectors. This document is not a research analysis produced by the Research Department of National Bank Financial.


National Bank Financial is a subsidiary of National Bank of Canada. National Bank of Canada is a public company listed on the Toronto Stock Exchange (NA: TSX).

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