Two Years of 20% Gains—Is There Really a Reason to Be Bearish?

 

20% gains two years in a row isn’t a reason to be bearish

What is this chart showing?

This chart shows S&P 500 returns following two consecutive years in which the index gained 20% or more.

Why is it important?

The S&P 500 rose 25% in 2024, marking the second consecutive yearly gain of 20%+ (26.3% in 2023).

Despite the uneasiness investors may feel following periods of strong returns, history shows that stocks often continue to perform well in the subsequent year.

Prior to 2024, there were eight instances of back-to- back 20% gains since 1950. The average return in the following year was a healthy 12.3%, and in only two instances did the index fail to deliver a gain.

Further support can be found in expectations for continued economic strength and robust corporate earnings growth in 2025. That said, as is often the case in investing, the path is likely to be bumpy and include pullbacks along the way.

Subscribe to the Market Intel Exchange, Lincoln’s chartbook keeps you informed on the most notable economic and market insights from this quarter.

Related: The Truth About Market Drawdowns: How Often They Really Happen

Source: Morningstar. Returns reflect the S&P 500 Total Return Index, including dividends. Past performance does not guarantee or predict future performance. Index performance is for illustrative purposes only. You cannot invest directly in the index.