This Crazy Chart Perfectly Illustrates Why You Should Never Expect 'Average' Returns

We hear frequently from folks like Wharton professor Jeremy Siegel about the long history of the stock market outperforming other financial asset classes.

Investment advisors often put it simply, saying that annual returns average around 10% and about 3% less than that on an inflation-adjusted, or real, basis.

"Real US equity returns have annualized 6.8% since the 1870s, ahead of the 2.7% return from US government bonds," Citi Research's Jonathan Stubbs writes.

In reality, we rarely see a year when returns are average.

In a new report examining asset allocation, Stubbs presents this bar chart showing the average annual returns for stocks and Treasury bonds by decade. As you can see, most average annual returns swing far from average levels during these 10-year periods. This makes it very challenging to a be an investor strategizing for the long-term.

"Equities have had three decades of negative real returns vs. five decades for bonds," Stubbs noted. "Real equity returns have beaten real bond returns in 12 out of the last 15 decades."