Do downturns lead to down years?
Written and accurate as at: Oct 01, 2021 Current Stats & Facts
Stock market slides over a few days or months may lead investors to anticipate a down year. But a broad Australian market index has had positive returns in 16 of the past 20 calendar years, despite some notable dips in many of those years.
Three interesting facts
- The broad Australian market index intra-year declines have ranged from -3% to -45%.
- In 16 of the past 20 years, the steepest market declines saw notable recoveries ending with gains for the year overall.
- Even in 2020, when the market declined 36% associated with the coronavirus pandemic, Australian stocks ended the year with gains of 2%.
'Australian market' is measured by the S&P/ASX 300 Index (total return). 'Largest Intra-Year Decline' refers to the most significant market decrease from peak to trough during the year. S&P/ASX data reproduced with the permission of S&P Index Services Australia. (Source: Dimensional Fund Advisors)
Volatility is a normal part of investing. Tumbles may be scary, but they shouldn’t be surprising. A long-term focus can help investors keep perspective.