122 year Dow Jones Histogram: Putting 2017 into context

2017 was a pretty good year for the stock market.  The 19th best since the Dow Jones Average was introduced in 1896.

This decade hasn’t been bad either.  We haven’t had a down year.  This has never happened in a full decade before.  That being said, we shouldn’t fall in to the trap of believing in some sort of mythical mean reversion in 2018 or 2019.  We may not have a down year this decade.

Nearly 70% of the time, the stock market has moved higher; and the average “up year” has been better (+20%) than the average “down year” has been bad (-15%).  At least that’s the way the last 122 years have gone.  If this history is a guide (yes, a big if) the likelihood that we finish out the decade with ten consecutive up years is about 50/50.

For what it is worth, the decade-to-date returns only rank fourth out of 12+ decades of the Dow.  We’ll see what the next two years bring as we finish this one out, but – at least looking backward – it hasn’t been a terrible idea to be long the US stock market over the past four decades.  It might not be terrible for the next four either.