The index showed a loss of 15% for the year as of April 8.
From the bottom, the market took off like a rocket and rose almost 40% from there through the end of the year. The S&P 500 ended 2025 with a gain of almost 18%.
To summarize, there was a peak-to-trough decline of about 19%, but the market still ended the year up almost 18%, a double-digit gain despite a double-digit decline.
One of my favorite aspects of stock market behavior is that this kind of thing is completely normal.
Just look at the data via Exhibit A:
The same thing also happened in 2020 and 2023. However, this is not just a 1920s phenomenon.
Of the 36 calendar years since 1990, 21 have seen intraannual peak-to-trough declines of 10% or worse. Of those 21 years, only 7 ended with a loss on a total return basis, meaning 14 times the market ended in positive territory. And 11 of those 14 years in the black posted double-digit gains.
That means that roughly 40% of all years since 1990 that have experienced double-digit declines have ended the year down 10% or more.
The stock market has the remarkable ability to generate both profit and volatility in the same year.
Of course, this doesn’t happen every time. In 2000, 2001, 2002, 2008 and 2022 there were double-digit declines and the market ended the year in double digits.
This is one of the most difficult aspects of investing in the stock market; usually it comes back after big losses, but sometimes it takes a while.
There will be times in the future when the stock market will test your patience again.
To earn the right rewards, you must survive the short- and long-term volatility in the stock market.
Further reading:
Do we need a long bear market?
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