Weekend Reading: What Comes After a Good Year in the Stock Market?
This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
The stock market experienced significant gains last year, but you might wonder, will that continue into 2024? Despite concerns that positive trends cannot last, historical data reveals good years in the market can in fact come in clusters.
READ THE ARTICLEThe stats: Human psychology tends to anticipate downturns after upswings, but good times can endure for longer than expected. Author Ben Carlson cites stretches of positive stock market cycles, such as the 2019 to 2021 period, as well as the dot-com bubble from 1995 to 1999. Upon analyzing historical data, Carlson found that double-digit “up” years can precede more double-digit “up” years over 40 percent of the time.
Keep in mind: All this being said, you are well aware of the stock market's unpredictable nature, meaning years of good returns can also be followed by losses. This is why we advise focusing on long-term returns, which have shown positive median figures over the past 95 years.
You might feel tempted to let short-term market fluctuations or forecasts sway your investment strategy, but don’t fall victim. If you hold true to a customized retirement plan and comprehensive process, you’re already on track for financial success.