If I were to ask you how much the U.S. stock market has grown on average every year, you might say 8-10%, and you would be right.
The trick is that any given year's growth is almost never 8-10%.
Instead, we have had some fantastic years, some awful years, and a lot of everything in between. It is not until you average them out that you get that 8-10% figure.
As challenging as 2022 was, the good news is that stocks tend to bounce back after bad years.
When the market has declined 10% or more in any given year:
The average return the following year has been a positive 8.5%.
The market has been up that same following year 63.6% of the time.
When the market has declined 20% or more in any given year:
The average return the following year has been a positive 27.1%.
The market has been up that same following year 100% of the time.
For context, the S&P 500 was down 18.11% last year¹.
Please view that as less of a forecast, and more of a testament to the power, and importance, of remaining invested through thick and thin.
"Market forecasters will fill your ears but never fill your wallet."
-Warren Buffett
If you would like to discuss this or anything else that is on your mind, you are always invited to schedule some time with me below.
1.Forbes. The S&P 500 Lost More Than 18% In 2022: Should Retirees Be Worried? 01/04/2023.
Moore Financial Management, Inc. is an Investment Adviser registered with the State of Florida. Our current disclosure brochure, Form ADV Part 2, is available for your review upon request. Past performance is no guarantee of future results. It is not possible to invest directly in an index. Any mention of specific securities is not a recommendation. Do not act on any of the information contained within this article without first consulting with your investment, tax, and legal advisors.