How Should Investors’ Long-Term Returns Be Measured?

Hendrik Bessembinder, Te-Feng Chen, Goeun Choi and K. C. John Wei

Financial Analysts Journal, 2025, vol. 81, issue 1, 33-62

Abstract: We assess measures of long-horizon investment outcomes and clarify underlying trading strategy interpretations. We focus attention on a measure we call the “sustainable return,” defined as the rate of periodic withdrawal for consumption consistent with the preservation of real capital. We use this notion to highlight the role of return sequence risk, which is distinct from risk in the overall level of returns. We illustrate this and several other long-horizon measures in a global stock sample, emphasizing limitations of the arithmetic and geometric means of short-interval returns and the necessity in many contexts to consider the reinvestment of interim cash flows.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/0015198X.2024.2401765 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:ufajxx:v:81:y:2025:i:1:p:33-62

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/ufaj20

DOI: 10.1080/0015198X.2024.2401765

Access Statistics for this article

Financial Analysts Journal is currently edited by Maryann Dupes

More articles in Financial Analysts Journal from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().