The data is in.
Last year the US stock market via the index of its five-hundred-or-so largest companies was up more than 17% including dividends.
That number doesn’t tell the whole story though.
Did you know that the stock market had a very bad start last year?
Actually, bad is too weak to describe it. It was a historically horrible start.
Like 1930s and COVID pandemic style ugly. Here is Charlie Bilello with the chart1:
While Bilello did not have the data when that chart was made back in April, we do now.
And stocks ended up on the year even after such a start.
Last year taught us that it’s not where you begin. It’s how you finish!
Of course, not all years end well. But it’s a good lesson to remember over an investment life, as there are bulls and bears along the way.
This year has been off to a good start.
There is a Wall Street phrase that many think of this time of year that goes something like this: So goes January, so goes the year.
DataTrek did some research on that phrase and they conclude that though it is not perfect, history has shown that “a positive performance for the S&P in January tends to lead to much stronger returns for the year overall.” 2
But haven’t we had several years of good returns? Yes.
Does this mean we should expect a bad year? Not necessarily.
In fact, economic expansions and bull markets in stocks typically last much longer than recessions and bear markets. JP Morgan Asset Management illustrates this wonderfully3:
Some say that the stock market is getting too high—and it is high by historical valuations. Many point to tech and a potential AI bubble. Michael Cembalest points out though that “while the current tech capital spending surge as a share of GDP has now exceeded the dotcom era, technology valuations are roughly half the levels seen at the dotcom peak…”4
None of this is meant to minimize the pain of recessions or bear markets, nor is it meant to indicate what may happen this year.
As I wrote over at my column for a Northern California website, you should be a gardener not a gambler when it comes to investing. Rick Rieder, at the world’s largest asset manager, believes that theme is more important now:
If there’s a single message we’d leave you with as we head toward 2026, it’s this: the game has changed.
The period when nearly every chip you placed in the market seemed to pay off is behind us…
That’s an environment where gambling in markets offers much worse odds than it did a few years ago. Investing, by contrast, still offers very good odds: owning durable income, strong balance sheets, and businesses on the right side of the productivity revolution, and then giving those positions time to compound. In our view, the opportunity now belongs to those willing to act like investors, not gamblers — leaning into selectivity, patience, and discipline in a market that is once again distinguishing between quality and everything else.5
While we don’t make assertions about whether the game has changed or not, the start of each year is a good time to remind yourself of timeless investment principles and revisit your financial goals and risk tolerance and to remember not to treat investing like a slot machine or make decisions based on erratic emotion.
How you finish your investment journey—and the kind of investor you reveal yourself to be along the way—is more important than what happens in a single year.
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Sources:
- “2025: The Year in Charts”. Accessed online: https://bilello.blog/2026/2025-the-year-in-charts
- Monday, January 5, 2026. Accessed online: https://datatrekresearch.com/so-goes-january-so-goes-the-year/?v=0b3b97fa6688
- “Guide to the Markets” 1Q 2026. Accessed online: https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/guide-to-the-markets/
- “Eye on the Market: 2026 Outlook”. Page 6. Accessed online: https://privatebank.jpmorgan.com/content/dam/jpm-pb-aem/global/en/documents/eotm/smothering-heights.pdf
- “The Odds Are Changing: 2026 Is a Market for Investors, not Gamblers”, January 2, 2026. Accessed online: https://www.blackrock.com/us/financial-professionals/insights/investing-in-2026