Welcome to our 2024 market outlook! We hope that this year is your best year yet. 

Just like in early 2023, we looked through history for clues on how the market may perform this year. We wanted to find 3 reasons to once again remain optimistic and stay invested in stocks. 

Let’s start with how the market has previously performed after an exceptional year. The S&P 500 has had a return of more than 20% 27 times since 1950. It has kept moving up and finished positive in the year after 74% of time, with an average return of 11.29%. The market tends to have a pretty good follow-up to a great year.

 

However, in the years since 1950 when the market returned 20% or more after a down year, like it just did in 2022 and 2023, the results were even better. This has happened 10 times and the market was positive 100% of the time in that 3rd year with an average return of 16.91%. 

 

The next thing we looked at carefully was the market returns during election years. The S&P 500 has had an average return of 10.8% in the years of a U.S. Presidential election going back to 1933.

 

However, when an incumbent President is running for his second term—like Joe Biden is this year—the market has always had a positive return with an average of 17.4% in those years regardless of the election results.

 

Finally, for our third reason for optimism, we looked at the history of bull markets. Once the market enters a bull market, like we are now in, it tends to stay there for a while. 

The average length of the 12 bull markets since 1942 has been 4.2 Years. We are now only 7 months into this current bull market that began in June 2023. The green bars are the bull markets measured in years- the smaller red ones are the bear markets.

 

The S&P 500 is now up about 33% since this new bull market began. 

Since 1942, The average bull market has returned 147.2%—so we may have a lot more to gain before it is over. This chart shows the bull markets in green and the bear markets in red. As you can see again- over time- the bull market gains have made the bear markets losses look tiny by comparison. We also added a line around the current market gain of 33% to give you an idea of how much further the market has grown during previous bull markets. 

This data makes us optimistic that we have the opportunity for another great year ahead. However, as we have in the past, and will continue to do in the future, we will focus our energy and decisions on remaining prepared, not on predictions.

Thank you and we are looking forward to another great year with all of you! Be on the lookout for our next Financial Planning Fridays episode. Subscribe to our Youtube Channel so you never miss an episode. Or contact us directly; schedule your 15-minute call with us today.