We have experienced three double digit annual return years in a row. There are reasons to feel like this bull market could come to an end. However, there are many reasons we could see this upward trend continue. Unemployment remains below 5%, top earning companies remain flush with cash, the consumer continues to support retail sales and banks continue to be in good financial shape with debt defaults at reasonably stable levels. Net charge offs of all loans at insured institutions fell year over year in the third quarter of 2025 while non-current loans remained steady.
Looking at past annual returns of the Standard and Poor’s 500 Index the prospects for another up year could be good. The graph below from Bespoke Investment Group shows that the median annual return in the year following returns between 10-20% has been 11.8%, and has been positive 70% of the time since 1928.
But, what about the fact that we’ve had three double digit years in a row? This is not unusual. In fact, The S&P 500 Index has experienced four or more positive years in a row six times in the past 95 years. No need to cry in your soup yet. I’m not opposed to caution at this point in the game. However, there is certainly no call for alarm.
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