With 10 weeks left in the 2025 calendar year, the SP 500 (total return) has returned +14.47% YTD, which places the key benchmark on track for its 3rd year in a row of double-digit returns, with 2023 and 2024 SP 500 returns being over 25% annually.
- 2025: +14.40% YTD return for SP in 2025
- 2024: +27.04%
- 2023: +26.19%
Historically, how often does this pattern happen ?
According to this blog’s historical SP 500 return data, infrequently.
The latest cluster was 2019 – 2021:
- 2021: +28.75% return for SP 500
- 2020: +18.2% return for SP 500
- 2019: +31.8% return for SP 500
Prior to that period, the longest cluster was the last 5 years of the 20th Century:
- 1999: +21.04%
- 1998: +28.58%
- 1997: +33.36%
- 1996: +22.96%
- 1995: +37.58%
Quick analysis: to my knowledge, there has never been 5 years in a row of SP 500 returns like the period from 1995 to 1999, but this blog’s data only goes back to 1970. That – I believe – is truly an unprecedented period of annual SP 500 returns.
2023 – 2025 instance and the 2019 – 2021 instance are slightly more common with +20% returns accompanied by a mid-teens annual return.
What’s the point of the article ? Like this late 2024 blog post about longer-term SP 500 stock returns, I thought 2025 might be a year of “PE compression” since the SP 500 EPS growth in 2023 and 2024 was only +2% in 2023 and +10% in 2024, yet the SP 500 returned 53% cumulatively over the 2 years.
The point being this blog’s 2025 SP 500 return forecast was too conservative, and I wasn’t expecting a +14% YTD return by November ’25.
Depending on how the last 10 weeks of the year progresses, the probability is growing that 2026 or 2027 is a more difficult year for investors.
The 5 years at the end of the late 1990’s was followed by a 50% correction in the SP 500, and an 80% correction in the Nasdaq beginning March, 2000 to March, 2003, and the three-year period following Covid was followed by 2022, when the SP 500 fell 18% and the Barclay’s Aggregate fell 13%.
What’s unspoken about these return patterns is that given current estimates today, 2026 is likely to see 14% EPS growth for the SP 500, which was written about here on September 12th, 2025, which means we could very likely see a year of “PE compression” which means SP 500 earnings growth will be mid-teens, and the SP 500 could be something less, like 5% – 10% or even slightly negative, depending on the “macro”.
Summary / conclusion: After a 15-year secular bull market in stocks (mainly the SP 500 and the Nasdaq), I thought it was worth pointing out these patterns to readers that have emerged over the last 30 – 40 years.
Since 1970, the SP 500 has averaged 12.43% per year over those 55 years. When we get a series of consecutive years above that average, the probability improves that investors will likely see a year that is below (or well-below) that average.
2025’s SP 500 total return is better than I thought it would be a year ago, with two consecutive years of +25% returns.
None of this is advice or a recommendation, but only an opinion. Past performance is no guarantee of future results. None of the information posted today may be updated, and if updated, may not be done in a timely fashion.
Thanks for reading.