Stock market since 1975

Past market returns provide a great way for you to see how much volatility to expect when you invest in the stock market. Negative stock market returns occur, on average, one out of every four years. You will see the positive years far outweigh the negative years.

In any given year, the actual return you earn is likely to be far different than the average return. The pattern of returns can vary over different decades.

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In retirement, your exposure to a bad pattern, where many negative years occur early on in retirement, is referred to as sequence risk. As bad years are to be expected, it doesn't mean you shouldn't invest in stocks; it just means you need to set realistic expectations when you do.

The down years have an impact, but the degree to which they impact you is often determined by whether you decide to stay invested or get out. An investor with a long term view may have great returns, while one with a short term view who gets in, and then bails out after a bad year may have a loss.

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However, the magnitude of that down year may mean it could take many years for your investment to recoup its value. In , there was an increase of In , if you stayed invested, you would have seen another increase of In , another positive year occurred and you would have seen another boost, but only by 2. If you remained invested the down year was not devastating to you. If you sold, however, and moved your money into safe investments , it would not have been able to recover its value over that same time period.

If you are not willing to stay invested through a bear market than you need to either stay out of stocks, or be prepared to lose money, because no one will be able to consistently time the market to get in and out and avoid the down years. If you are going to invest, you should expect the down years.

How on earth could you be surprised when they occur? Most investors don't invest January 1, and withdraw on December 31, yet market returns tend to be reported on a calendar year basis.

New York Stock Exchange - Wikipedia

An alternate way to view returns is to look at rolling returns , which would look at returns of 12 month periods, such as February to the following January, March to the following February, April to the following March. Check out my graphs of historical rolling returns , for a perspective that extends beyond a calendar year view.

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Calendar year returns are shown in the table below. Search the site GO.

Updated April 26, How Often Does the Stock Market Lose Money? Get Daily Money Tips to Your Inbox Email Address Sign Up.

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