136. How Often is the Market Down in Consecutive Years?

Dec 28, 2022

Market down consecutive years

As we prepare to turn the page to 2023, it’s impossible to ignore the state of the market as we close out a second consecutive year with negative returns. Investor concern seems more elevated than normal, which isn’t a surprise because this situation doesn’t occur often. The market rarely sees a down year followed by another down year, but that’s where we find ourselves right now.

We can’t make predictions on the market, but we can extract data from previous down years and try to make educated assumptions. In this episode, Laura Stover, RFC® and Michael Wallin, CFP® will provide context for this investment environment to help you better understand why we’re going through this extended down period. We’ll also take the current data and analyst projections to try to determine whether another year like this could happen in 2023.

We’ll also discuss the investment strategy that will best position you in markets like these because 2022 reminded us that even ‘safe’ investments aren’t always protected from significant losses. This year will also go down as the worst year for 10-year treasuries in modern financial market history. The only other time we witnessed a double-digit loss on the benchmark US Government bond was 2009, but it show us that proper planning is essential. That’s why we’ll tie it all back into our Redefining Wealth® strategy, which makes sure your money is diversified into multiple buckets based on time horizon so your retirement isn’t impacted by consecutive years of down markets.

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Timestamps (show notes):

5:15 – Why it’s difficult to predict 

7:37 – What past data tells us about bounce backs

10:06 – Making comparisons to the Great Depression

13:10 – Consumer spending now versus past years

18:53 – The string of bad years from 2000-02

22:10 – The worst year for 10-year treasuries

23:37 – Building a properly diversified portfolio


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