In the stock market, two consecutive down years are rare
It is now certain that 2022 will be a down year on the stock market. But how about 2023? How likely is it that stocks will fall two years in a row.
How likely are two consecutive down years?
Two consecutive down years are surprisingly rare in the stock market. These events, as measured by the S&P 500 index, are only:
Years 1929-1932 (Great Depression)
Years 1939-1941 (World War II)
Years 1973-1974 (oil crisis)
Years 2000-2002 (the bursting of the IT bubble).
In other cases, a down year has been followed by a strong up year
For example, a 5.9 percent decline in 1934 was followed by a year of 41.4 percent growth. In 1957, shares fell 14.3% and the following year rose 38.1%.
During the financial crisis, shares fell by as much as 38.5% in 2008, but rose by 23.5% already in 2009. The last decade's down years were 2015 and 2018. In the following years, the market was already on the rise. In 2016, the increase was 9.5% and in 2019 it was as much as 28.9%.
Out of the thirteen down cycles, in four cases there have been two or more down years in a row, and in nine cases the down year has been followed by an up year.
Statistically, it is therefore more likely that a down year will be followed by an up year. In addition, two consecutive down years have required some epic event, such as a world war, the Great Depression, the bursting of the IT bubble or the oil crisis. Not even the financial crisis caused two consecutive declining years.
2023 may become a year of decline if the current economic situation turns into a major crisis. Otherwise, a boom year is more likely. We think more stable positive turn of the market will happen in the second year of 2023, if nothing epic happens.
@II-Quality$SPX500 (SPX500 Index (Non Expiry))$NSDQ100 (NASDAQ100 Index (Non Expiry))... Show More
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Tue Jun 24 2025 07:46:55 GMT+0000 (Coordinated Universal Time)
