Listening to these firms announce their SP 500 price targets for 2026, it’s easy to draw the conclusion that the “Street” is bullish in 2026. Today, it was DeutscheBank announcing an 8,000 price target (or an expected 17% increase) for the SP 500 by year-end ’26.
With just a month left in 2026’s trading calendar, the SP 500 has been on a 3-year tear:
- 2025: 17% YTD increase as of 11/30/25
- 2024: +27.04% increase in calendar year ’24
- 2023: +26.19% increase in calendar year ’23
Looking at annual SP 500 returns since 1970, it’s unusual but not unheard of to see 4 – 5 years of positive returns.
I had thought previously that the 1995 – 1999, strong of +20% SP 500 annual returns was the only one of it’s kind, but looking at the data again, in fact 1982 – 1986 saw this string of returns:
- 1986: +18.67%
- 1985: +31.73%
- 1984: +6.27%
- 1983: +22.56%
- 1982: +21.55%
The first 5 years of the 1982 – 2000 bull market started off with a bang. It was close to 1995 – 1999’s string but the mid-single-digit return in 1984 broke the pattern.
Of course in 1987, we then had the one-day drop of 25% on October 19th, 1987, that brought the averages closer to normal.
We saw a much lumpier set of returns from 1988 to 1994, with 30% returns in 1989 and 1991, and then -3% in 1990 (Gulf War I).
- 1999: +21.04%
- 1998: +28.58%
- 1997: +33.36%
- 1996: +22.96%
- 1995: +37.58%
The last five years of the 20th Century were a remarkably strong set of +20% returns. The “average, annual” return for the 5 years was 28%.
Then we saw the worst decade of SP 500 returns since the Great Depression.
Since 2010, the first string of good returns was 2012 – 2014:
- 2014: +13.69%
- 2013: +32.40%
- 2012: +16%
The 3-year average return was +20%.
2019, 2020 and 2021 was the Covid pandemic accompanied by zero interest rates:
- 2021: +28.75%
- 2020: +18.20%
- 2019: +31.80%
2022 saw a 13% decline in the Barclay’s Aggregate, and an 18% drop in the SP 500.
Summary / conclusion: This blog has raised this point about SP 500 return groupings, both here in November ’24, (early and wrong), and here, in September ’25. Some now call this “sequencing of returns” which I think is a good way to describe it, and what it does is caution the investor, that when a strong or cluster of these SP 500 returns is seen, perhaps, an allocation to cash or a bigger allocation to fixed-income, to await a market that presents a better buying opportunity might be warranted.
But that’s “timing” the market. The other thing to consider like the late 1990’s is, when you see a string of these returns which occurred in the last 5 years of the 1982 – 2000 secular bull market, perhaps much more caution is warranted.
Warren Buffett sat on a lot of cash in the late 1990’s and is sitting on $381 billion (?) again today. Is Mr. Buffett early with his market-timing, like he was in the late 1990’s, since this current bull market is 15 – 16 years old, which is not young, but it’s certainly not early in the bull market ? Probably, but Mr. Buffett will eventually be right.
Ed Yardeni, the earnings guru who is widely respected and been around Wall Street since the 1990’s, has returned to his “Roaring 2020’s” thesis for this decade, which probably follows his own experience with the 1990’s. Ed Waffled about the Roaring 2020’s thesis around the “Liberation Day” drop in the SP 500 early in 2025, but it sounds like he’s back on track for 3 – 4 more years of solid returns for the SP 500, or through the end of the decade. (My words, not his.)
This blog hasn’t made major allocation shifts for clients, and prefers not to make major, sudden changes, but rather smaller position changes are preferred over time, trimming those stocks, ETF’s, mutual funds, whose portfolio weight has increased thanks to capital gains, and recycling proceeds into underperforming asset classes.
Opinions make markets, and they are always welcome.
None of this is advice or a recommendation, but only an opinion. Past performance is no guarantee of future results. Annual return data is typically sourced from Morningstar, and before that Ibbotson, before they were acquired by Morningstar. Readers should gauge their own comfort with portfolio volatility and adjust accordingly.
Thanks for reading.