Many stock market indices around the world, including the S&P 500 Index, are up more than 20% this year.
Obviously, this is great news but also news that makes at least some investors more cautious about next year. History, however, contradicts the need for caution. Today’s chart, inspired by MKM Partners, a US financial research and trading company, shows that on average the S&P 500 Index continues to rise after a year with 20% or more return. In more than 80% of the time, equities went higher in the next year, rising by an average of 11%. Hence, while this year’s stock market rally is substantial, it is not a cause for concern.
