Do Downturns Lead to Down Years?
From Dimensional Fund Advisors
Stock market slides over a few days or months may lead investors to anticipate a down year. But the U.S. stock market had positive returns, despite some notable dips in many of those years.
Intra-year declines for the index ranged from 3% in 2017 to 49% in 2008. Many years with large intra-year declines saw positive annual returns. In 17 of the last 20 years, U.S. stocks ended up with gains for the year (see Exhibit 1).
EXHIBIT 1
Down but Not Out
Russell 3000 Index returns, with steepest declines within each year, January 2003–December 2022
Past performance is not a guarantee of future results. The information in this material is intended for the recipient’s background information and use only. It is provided in good faith and without any warranty or representation as to accuracy or completeness.
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.