The S&P 500 Just Did Something for the 5th Time in 97 Years. Here's What History Says May Happen in 2026.

Core Viewpoint - The S&P 500 has achieved significant gains over the past three years, raising questions about its future performance in 2026, with historical patterns showing mixed outcomes following similar streaks [3][10]. Historical Performance - The S&P 500 ended 2025 with a gain of 16.4%, following increases of 23.3% in 2024 and 24.2% in 2023, marking the fifth instance in 97 years where the index has delivered over 16% returns for three consecutive years [3]. - The first occurrence of the index rising by 16% or more for three consecutive years was from 1995 to 1997 during the dot-com boom, with subsequent notable streaks from 1996 to 1998 and 1997 to 1999 [4]. - The next streak of three consecutive years of 16% or more gains occurred two decades later, with returns of 28.9% in 2019, 16.3% in 2020, and 26.9% in 2021 [5]. Future Projections - Historical data shows a mixed record for the S&P 500 following three consecutive years of 16% or more gains, with notable increases in some instances, such as a 26.7% rise in 1998 and a 19.5% rise in 1999 [6]. - However, there have also been declines, such as a 10.1% drop in 2000 following the 1997-1999 streak, and a 19.4% decline in 2022 after the 2019-2021 gains due to rising interest rates [7][9]. - The outlook for 2026 remains uncertain, with potential for continued momentum driven by trends like artificial intelligence, but also risks associated with high valuations, as indicated by the S&P 500 Shiller CAPE ratio being at its highest level since 2000 [10][12]. Long-term Investment Strategy - A more reliable strategy for investors may be to focus on the S&P 500's historical performance over rolling 20-year periods, which has delivered positive total returns 100% of the time, suggesting a favorable outlook for long-term investors [14][15].