Do Downturns Lead To Down Years?
Volatility is a normal part of investing. Tumbles may be scary, but they shouldn’t be surprising.
Written by Patryk Dyjecinski

IFA and Founder of Clara Wealth

Stock market declines over a few days or months may lead investors to anticipate a down year. But the US stock market had positive returns in 16 of the past 20 calendar years, despite some notable dips in many of those years. The UK market has had positive returns for 24 out of the last 35 years.

  • Over the last 20 years intra-year declines for the US market ranged from 3% to 49%.
  • Over the last 35 years intra-year declines for the UK market ranged from 2% to 43%.
  • Many years with large intra-year declines saw positive annual returns. In 16 of the last 20 years, US stocks ended with gains for the year. In 24 out of the last 35 years, UK stocks ended with gains for the year.
  • Even in 2020, when there were sharp market declines associated with the coronavirus pandemic, US stocks ended the year with gains of 21% (the UK ended down 12% that year).

Volatility is a normal part of investing. Tumbles may be scary, but they shouldn’t be surprising. A long-term focus can help investors keep perspective.

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Past performance is not a reliable indicator of future performance. The value of investments may go down as well as up and you may get back less than you invest.

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All-Time-High Anxiety

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