As we approach the final weeks of the year, one thing is clear: 2024 has been an extraordinary year for the stock market.
The S&P 500 is currently up over 26% year-to-date. Even with potential volatility, it’s on track to close out the year with gains exceeding 20%. This is remarkable as 2023 also saw over 20% growth, marking the first back-to-back 20%+ years since 1998-1999—a rare event in recent market history.
Naturally, some investors might feel cautious about 2025, assuming the market is “due” for a correction. But history tells a different story.
Since 1928:
The average return following two consecutive 20%+ years is 7.0%, slightly below the historical average of 11.1% but still solid.
The market has been positive more than two-thirds of the time in these scenarios, which is very similar to the historical average.
Double-digit losses? You’d have to go back to 1937 to find such a year following this pattern.
What does this mean for investors?
While we may not see another exceptional year like 2024, the data doesn’t suggest a high likelihood of significant underperformance. Investors should stay committed to their long-term strategies rather than making reactive changes to their portfolios.
History rewards patience and consistency in investing. Let’s finish the year strong and stay focused on the bigger picture.
