By Ben Carlson
A Wealth of Common Sense
The S&P 500® Index is up just shy of 18% in 2023.1
Maybe these gains will stick (or get better) or maybe the market will roll over. I don’t know.
The stock market is unpredictable, especially in the short term.
But, it’s important to understand that even in the really good years, there’s a decent chance you’ll have to live through a correction along the way.
Since 1928, the S&P 500 has finished the year up 10% or more 55 times. In 23 of those 55 years, there was a correction from peak-to-trough in that same year of 10% or worse.
In that same time frame, the stock market experienced 34 years with gains of 20% or more.2 Out of those 34 years, there was a correction of 10% or worse on the way to those gains in 16 years.
So, in almost half of all years when the U.S. stock market was up by 20% or more, there has been a double-digit correction during the journey to those wonderful gains.
1It was down 18% last year. I know an 18% gain doesn’t make up for an 18% loss, but I find this interesting, if not useless.
2One of my many favorite stats about the stock market — over the past 95 years, there have been more +20% years (34x) than years where stocks finished down (26x). Surprising but true.
The commentary is the opinion of the author and distributed with permission under limited license. All data and charts presented herein are from sources deemed to be reliable but are not guaranteed to be accurate. The financial information presented is for information and educational purposes and is not a substitute for professional advice; use of or reliance on any information herein is solely at your own risk. Edited from the original.
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