I commonly hear that the S&P 500, and thus VOO/ SPY/ etc, has averaged 8-12% per year since it's inception. Therefore, there is nothing reason to "get cute" with with portfolio construction.

Even the best investors in the world are only achieving a 12-15% max return per year over the long-run, so it makes no sense to seek financial advisor or pay additional fees for actively managed mutual fund because in the end, you can essentially achieve the same, if not higher return, by simply buying VOO and nothing more.

However, just questioning this at very surface level detail, I can already see that the 8-12% avg annual return that is referred to actually represents the ARITHMETIC average. From an investing standpoint, is that not irrelevant since what we care about is the GEOMETRICA AVERAGE (how our money compounds)????

When i look at rolling Geometric average returns over 10, 20, 30, and 40 year peiords, it looks like the S&P's average annual returj is actually closer to 4.5%-5.5%.

This is already a far cry from 12%, however, when I tried to adjust inflation, I found that the average annual compounder REAL RETURN is closer to 1.25%!!!

Finally, I adjusted to acvount for the median LT cap gains rate, and found that since the S&P's inception, it's average 10-year geometric return is 0.96%! A little over 1% for 20, 30, 40 year periods.

Would love to hear from some experienced Bogleheads who have likely run into this before and how it's debunked?

In the end, I think misconception really stems from common use of arithmetic return for stating performance when that does not represent the actual growth experienced by an investor's money.

If this is the case, then it seems that all of the Domestic Large Core managers who maybe do not outperform on the upcapture, but beat the S&P more significantly on down capture, actually do yield a better overall return, potentially even net of fees????