With just 24 trading days left in 2025 and the S&P 500 up about 14%, a strong year for stocks appears highly likely. If you are skeptical, consider that we’re coming out of one of the best earnings seasons in years by the numbers, the fiscal stimulus from the One Big Beautiful Bill Act (OBBBA) that kicks in after New Year’s is fast approaching, and the holidays are typically favorable for stocks from a seasonal perspective.

 

Of course, every year is different, but one element of the path for stocks this year that is quite common is the fact that stocks suffered a correction on the way to strong gains. As you can see in the “It’s Not Over Yet, But 2025 Looks Like Another Year of Big Gains and a Large Drawdown” chart, the S&P 500 experienced a drawdown of 18.9% this year but is actually up more than 13% for the year. This pattern is not uncommon, as the chart illustrates. In fact, the average drawdown in a given calendar year has been over 14% since 1980, while the S&P 500 has gained an average of 10.7% per year during that time. Double-digit intra-year declines often come with double-digit annual gains, one of the most powerful messages in investing. It’s easy to get scared out of the market when volatility arrives, so those investors who keep this pattern in mind should be more confident holding on through the tough times.

 

Volatility is like a toll that investors pay on the road to attractive long-term returns. This year offers us this powerful lesson once again.

 

It’s Not Over Yet, But 2025 Looks Like Another Year of Big Gains and a Large Drawdown

• Source: LPL Research, FactSet 11/25/25
• Disclosure: Past performance is no guarantee of future results. All indexes are unmanaged and can’t be invested in directly.

 

It’s also instructive to group annual returns and stack them, as we’ve done in the “Positive Years Dominate Stock Market History” chart.

 

Positive Years Dominate Stock Market History

• *2025 price gain for the S&P 500 is year to date through 11/24/25. Data series: 1950-Present.
• Source: LPL Research, FactSet 11/25/25
• Disclosure: Past performance is no guarantee of future results. All indexes are unmanaged and can’t be invested in directly. The inception of the S&P 500 Index is 1957. Performance for the index before that reflects that of the predecessor index, the S&P 90.

 

Over 75 years for the S&P 500 (and its predecessor) and stocks have only been down 25% or more twice — in 1974 and 2008. Only five times total has the index lost over 15% in a calendar year. When those outliers — all associated with skyrocketing inflation, recessions, financial crises, or interest rate shocks — are removed, the picture that emerges is clear. Stocks usually go up.

 

Historically, the S&P 500 has done better than a 5% loss in a calendar year 79% of the time, with gains 75% of the time. Over all three-year rolling periods by month since 1950, the S&P 500 was higher 85% of the time. Over 10 years, those odds go up to 92%, and that is excluding dividends, which makes these numbers even better. Bottom line, longer time frames than a year produce even higher frequencies of gains, making staying the course the best approach in most market environments.

 

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