In the nine years from 2000 to 2008, the S&P 500 was down almost as much as it was up:
That’s three consecutive down years from 2000-2002, followed by a big down year in 2008.
It has been a much smoother journey since 2009.
The S&P finished the calendar year lower only twice in the last 17 years:
In 2018, the S&P 500 finished the year down just over 4%. Then, in the 2022 bear market, stocks fell almost 20% by the end of the year.
And that’s it for the annual losses.
Of course, there were corrections during this process.
There were five double-digit corrections in the 2010s. Two of these were very close to 20% losses. The Covid bear market in 2020 saw losses exceeding 30%, but the market finished the year with double-digit gains. The same thing happened last year after the Independence Day unrest. There was a minor correction in 2023.
But most of those years are still over.
The Russell 2000 and Nasdaq 100 haven’t fallen much this cycle either.
Here are the losses of the Russell 2000 since 2008:
- 2011 -4.2%
- 2015 -4.1%
- 2018 -11.0%
- 2022-20.4%
Nasdaq 100 recently One Lowest year since 2008:
So, in the more than 17-year bull market in U.S. stocks, losses have been minimal for investors.
From 2000 to 2008, the Russell 2000 far outperformed the S&P 500 in terms of magnitude of losses but still experienced many downside years:
- 2000 -3.0%
- 2002 -20.5%
- 2007 -1.6%
- 2008 -33.8%
The Nasdaq 100’s losses from 2000-2008 make almost everything else look pale in comparison:
- 2000 -36.1%
- 2001 -33.3%
- 2002 -37.4%
- 2008 -41.7%
The stock market tends to have ups and downs. Down years may cluster together, or you experience a major change that signals a seriously negative year.
Could we see a bad year in 2026? It’s definitely possible.
Here are the year-to-date returns of these three indexes until Thursday’s close:
- S&P 500 -3.5%
- Russell 2000 +2.3%
- Nasdaq 100 -4.6%
Three thoughts about down markets:
- In bull markets, these things don’t happen very often.
- Wins and losses tend to cluster.
- Don’t be surprised if we have a bad year in 2026. We haven’t experienced most of these.
But don’t be surprised if this is another correction that will lead to a good year for stocks.
This is the dilemma of investing in risk assets.
Michael and I talk about bad years in the stock market and much more in this week’s Animal Spirits video:
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Further Reading:
Performance of Stock Market After Correction
Now here’s what I’ve been reading lately:
Books:
12018 was a bit negative for the ETF, but the index’s total return was +0.04%.
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