Coming off another strong year in 2025, we’ve now experienced three consecutive positive years for the S&P 500. History shows this isn’t unusual – it’s happened 37 times in the past 100 years. But what does it mean for investors going forward?
Looking at the data, the near-term becomes a little less predictable after a three-year winning streak. While markets are still positive about 65% of the time in the following year, this is a drop from a 74% win rate in all years, indicating the range of outcomes widens.
The average return for a 1-year period also drops from over 12% to just under 10%, suggesting near-term headwinds could be entirely reasonable.
However, despite some near-term uncertainty, the long-term story remains intact. As we extend the timeline to 3, 5, and 10 years, returns converge closer to their historical averages. The S&P 500 is also positive over 91% of the time in the rolling 10-year periods (compared to 95.56% positive outcomes over 10-year periods across all market conditions).
The takeaway? Market cycles are a natural part of investing, driven by economic fundamentals, corporate earnings, interest rates, and investor sentiment. While consecutive positive years can sometimes lead to concerns about valuations or being “due” for a correction, markets don’t operate on a predictable schedule. The key is recognizing that volatility is the price of admission for long-term equity returns, regardless of recent market performance.
While near-term choppiness shouldn’t surprise anyone, especially in a midterm year, winning streaks don’t fundamentally change the long-term trajectory of markets. For investors focused on their long-run goals, the plan doesn’t change. Stay diversified, maintain a well-diversified portfolio aligned with your risk tolerance and time horizon, and remember that short-term noise shouldn’t derail long-term success.
– The Aspire Wealth Team
Market Volatility Is Normal In Midterm Years
