Bitcoin, the S&P 500, and gold: how to compare a decade of returns

Annualized return is the destination. Drawdown is whether anyone stayed on the road.

The decade the slug remembers

The original piece ranked bitcoin's roughly 124% annualized 10-year return above the S&P 500 and gold and called it the decade's best asset. Compounding at that rate turns a small sum into a ridiculous one, which is why the chart went everywhere. Annualized return is silent on the path. Bitcoin's path included drawdowns of more than 70%. An investor who sold the bottom did not earn the annualized number. Most of the people who share the chart did not sit through it.

Drawdown and Volatility are the missing half of any 'best asset' ranking. Sharpe Ratio is the grown-up version: excess return per unit of swing. A spectacular compound annual growth rate with a brutal Sharpe is a different product from a moderate return you can hold.

What stocks and gold were doing in the same window

The S&P 500's decade return was the return of earnings growth plus a multiple, delivered with drawdowns that felt severe and were still smaller than bitcoin's. Gold's decade was a monetary and jewelry story with a different cycle. Comparing the three endpoints without the three paths is a leaderboard, not an analysis.

If you want the equity side of the comparison on this site, start with SPY when the ETF is listed, or with the S&P names inside Best S&P 500 Stocks. Gold miners are not gold. Do not substitute a mining stock for the metal and pretend the decade still matches.

How to use the ranking now

Past annualized returns are not an input you are owed. They are a description of a window that began at a low price. The next decade's bitcoin return depends on adoption, supply already being programmatic, and the discount rate investors apply to an asset with no cash flow. Stocks have cash flow. You can argue with a Discounted Cash Flow (DCF). You cannot run one on a token in the same way. That is the substantive difference the leaderboard skips.

Keep going: academy · best stocks · screener

Questions