By Debra Taylor, CPA/PFS, JD, CDFA™
Let’s take a brief backward glance at the S&P 500. The S&P 500’s performance in 2022 was its seventh worst since inception and the third worst since 2000. Looking forward, episodic volatlity, muted earnings growth, and a high cost of capital may pose headwinds for US equities in 2023. But there is a silver lining: since 1928, the Index has delivered consecutive years of negative returns only eight times. History may be on investors’ side as positive S&P 500 annual returns have followed a down year more than two thirds of the time. As shown in the chart below, positive years happen 72% of the time, and with even more frequency when the previous year was negative.
What’s more, January is off to a roaring start for stocks, which could mean more positive returns to follow. Good things tend to happen when stocks are higher during the Santa Claus Rally, especially during the first five days of the year and in January. You’ll notice the full-year return is higher more than 90% of the time and up 17.5% on average.
So, despite the headwinds, there are still plenty of reasons to be positive in 2023.
As always, please reach out with any questions.