Looking Toward 2023, this is what the Data Tells Us
What nearly 200 years of economic data tells us leading up to 2023...
There is access to stock market data ranging all the way back to pre-historic times (it’s a joke - calm down) of 1825. This is 197 years of data we can all analyze to get an understanding of what the common market trend has been for nearly 200 years. For me, I have looked at it to give some form of educated prediction as to what 2023 will bring for investors.
During the period mentioned, there have been 54 years where the total return was negative. Of those 54 years, 25 were correction years and seven of them were bear markets. The question, as mentioned, is what happens next year?
Well, the data tells us:
There has been a negative year 13 times in history with the following year also being filled with losses.
The last time we experienced back-to-back negative years was during 2000-2002. Before that, it was recorded during 1973-1974.
The average return following a down year is 9.2%.
The largest return after a down year was 53% in 1954.
The worst period of losses was 1929-1932.
The average loss during a down year is -11.9%.
The worst return after a negative year was in 1931 with -44% being reported.
So, with the data presented above and just using the logic of trends, my prediction is that 2023 will see positive returns. However, this prediction can be completely wrong as even the most intelligent and spot-on economists still have no clue when the supposed recession is set to hit. Even if the markets return positive, the returns will be historically less than the 10% commonly seen.