Making Money in the Stock Market: How Much Can You Really Expect?

The Analysis: The Real Numbers Behind the Myth

There are two truths about stock market returns that few people hear together. The first: historically, the US stock market (S&P 500) has returned approximately 10% per year on average over the past century, with dividends reinvested. The second — less often told — is that the average investor achieves only 4 to 7% per year over the same period. The gap between these two figures represents tens of thousands of euros lost over a lifetime.

This difference isn't explained by fees or bad luck. It's explained by human behavior: we buy when the market is rising (after reading headlines about a "stock market boom"), we sell when it falls (out of fear), and we repeat this cycle in exactly the opposite direction of what we should be doing. This is what DALBAR has been measuring annually since 1994 in its QAIB report (Quantitative Analysis of Investor Behavior). In 2023, the 20-year study showed that the average equity investor had earned 6.81% per year, compared to 9.65% per year for the S&P 500. A gap of 2.84% per year.

Over 20 years, a capital of €10,000 invested at 7%/year net reaches approximately €38,700. At 10%/year (the market's gross return, without behavioral biases): €67,000. The difference in behavior costs more than €28,000 — on a single initial investment of €10,000.

The Anecdote: The Investor Who Waited Too Long

In 2009, at the bottom of the subprime crisis, an investor had €30,000 sitting in a savings account. He had been waiting for a year for the right moment to invest. After the collapse of Lehman Brothers, he decided to wait even longer — "it could still go lower." In March 2009, the S&P 500 hit its floor. Our investor didn't invest. "Too risky." He waited for things to "calm down." He finally entered the market in September 2009, when the market had already rebounded by 53%.

He is not alone. Billions of euros sat "on the sidelines" during the crises of 2009, 2020, and 2022 — and missed the biggest rallies in stock market history. The most profitable period is often the one that feels the most frightening. If he had invested at the worst moment of the crash, he would have tripled his capital in ten years. By waiting for "the right moment," he simply missed the best days of gains — and those are the ones that make all the difference.

The Historical Fact: Buffett's Bet Against Hedge Funds

In 2008, Warren Buffett made a public $1 million wager with Protégé Partners, a New York fund-of-funds. The challenge: over ten years (2008-2017), a simple passive S&P 500 index fund (Vanguard 500 Index Fund) would beat a basket of five elite hedge funds — the best on Wall Street, managed by teams of analysts.

Result after ten years: the Vanguard fund had grown by 125.8%. The basket of hedge funds: 36.3%. Three times less. After management fees (often 2% annual fees + 20% of gains), investors in the hedge funds received a fraction of what a 0.04% fee ETF would have returned them.

"Investors — both institutional and individual — will do better by owning a low-cost index fund rather than trying to beat the market." — Warren Buffett, Berkshire Hathaway shareholder letter, 2016

This bet is not just an anecdote. It is the clearest demonstration ever made publicly that trying to "do better than the market" often costs more than it earns — even with the best managers in the world.

The Concept: Market Return vs. Investor Return

There is a fundamental distinction that trading platforms have no interest in explaining to you: the market return and the investor return are not the same thing.

The market return is the performance of an index (the CAC 40, the S&P 500) measured over a given period. It is an objective, calculable figure.

The investor return is what you actually earned — accounting for when you entered, exited, re-entered, and what you paid in fees at each transaction. This figure is almost always lower than the market return, sometimes by a wide margin.

The reason: investors concentrate their buying after rallies and sell during or after declines. This asymmetry contains a sad irony — you pay more to buy and sell for less to exit, exactly the opposite of good management.

The Axone Lesson

How much can you make in the stock market? The honest answer: between 5 and 10% per year, depending on your behavior and your market exposure — not on your talent for picking the right stocks.

What separates the market return from your actual return is essentially you: your decisions to enter and exit, your fees, your ability to stay invested during turbulent periods. At Axone Capital, we repeat it often: the stock market rewards discipline far more than intelligence.

The best investment you can make may not be finding "the next stock to explode" — it's staying in the game, regularly, over the long term, without giving in to panic. A simple S&P 500 ETF, invested monthly for twenty years, would have beaten 80% of professional managers. Not by magic. By discipline.