Stock market returns are often subpar after a strong 3-year streak, history shows
While the market has posted solid double-digit returns over the past three years, investors shouldn’t get their hopes up that the trend will continue, if history is any guide. According to SimCorp’s Melissa Brown, who cited data from Stocks, Bonds, Bills and Inflation (SBBI), the market may not see another strong year following three prior ones, as instances of four stellar consecutive years of more than 15% returns have been “rare” at only three since 1926. In 2023, 2024 and 2025, the market saw annualized returns of 26%, 25% and about 18%, respectively. With those gains, it is likely to see a below-average return in 2026, Brown said, particularly in the single-digit range. The S & P 500 has risen only 8% so far this year. .SPX YTD mountain S & P 500, year-to-date “I think that’s probably what we would expect for the whole year,” said the firm’s managing director of investment decision research. “That doesn’t necessarily mean a drawdown, but it does mean it would be extremely unusual to have a return of more than, say, 10% for the year.” Additionally, Brown noted that the fourth year following a three-year annualized return of 20% or more has an average return of just 3.9%. That’s significantly below the average of 11.8%, she said. To be sure, that doesn’t mean that this year will follow suit, especially if stocks related to the artificial intelligence boom continue to drive the market higher. However, if this year does, in fact, see low-double-digit growth, the likelihood of that happening next year is even lower, Brown said. “Things just can’t grow forever,” she said to CNBC. “We’re clearly closer to the end of the rally than the beginning.”
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