What Should You Expect in the Stock Market This Year (or Any Year)?

January 22, 2024

They say unsaid expectations breed resentment.

Man alive, is that ever true in relationships!

When we don’t get what we expect, it’s easy to become angry and bitter.

Guess what? This dynamic plays out in the stock market too.

If you are expecting a steadily, upward climb year after year, you are setting yourself up for disappointment.

That’s not how this investment thing works.

We do not and cannot know the future, but studying the past can help us set realistic, potential annual expectations. Ryan Detrick, over at Carson Group, gives the numbers: 

  • Each year sees more than seven different 3% percent dips.
  • More than three times a year do stocks correct 5%.
  • About once a year on average sees a 10% correction.
  • A 15% major correction happens every year-and-a-half.
  • A 20% bear markets happens about every three years.1 

The consistent incline of a 10 percent investment return in the S&P 5002 is a long-term journey filled with plenty of peaks and valleys along the way.

That’s why, over at our YouTube channel, I’ve called understanding volatility one of the most important lessons an investor can learn. (The beginning of the year may be a good time to rewatch it.)

If you want to be an angry and bitter investor, you will flee volatility whenever it comes and probably at the worst possible time.

You will likely also be fleeing the return.

Those that desire a relationship with the stock market need to go into it with the proper mindset.

Mr. or Mrs. Market can be a rather mercurial companion.

Many of those who have continued in this long-term relationship, have been rewarded. Just look at the data (including 3% inflation):

  • Stocks +6.8%
  • Bonds +1.6%
  • Cash +0.3%3

The stock market has offered a far more rewarding relationship than cash or bonds.

But you need to know what you’re getting into and ask yourself how committed you are.

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Sources: 

  1. Quote taken from “Volatility is the Toll We Pay”, April 18, 2023: Accessed online: https://www.carsongroup.com/insights/blog/volatility-is-the-toll-we-pay/. Updated data on chart from: https://twitter.com/EugeneNg_VCap/status/1744133785720164388/photo/1
  2. Investopedia: https://www.investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp
  3. Ben Carlson, “Historical Returns For Stocks, Bonds & Cash”, January 14, 2024. Accessed online: https://awealthofcommonsense.com/2024/01/historical-returns-for-stocks-bonds-cash/