After several years of strong market performance, it’s natural for investors to wonder what comes next. 

Will this continue? 
Are we due for a downturn? 
What should investors realistically expect in 2026? 

Let’s not pretend that not even the best analysts and researchers can look into the future and tell you exactly what markets will do next year. But what we can do, and what can offer both clues and confidence, is investigate the past. History offers something far more useful than predictions: perspective. 

Let’s explore some valuable insights and patterns from the past that might help frame more realistic expectations for 2026 and better prepare investors to respond thoughtfully to whatever this year brings. 

A Look Back: Recent Market Performance 

Recent market performance helps explain why these questions feel especially pressing. 

Over the past several years, markets have delivered multiple periods of above-average gains, even with some moments of sharp decline along the way. Taken together, the overall trend has been strong, but far from smooth. 

Chart data source: Bloomberg.Chartdata assembled by ChatGPT.

This kind of pattern can be confusing. Strong results can build confidence, but they can also raise concerns about whether markets have moved too far, too fast. 

It’s also important to remember that annual returns are a measuring tool, not a lived experience. Markets don’t move in straight lines, even during strong periods. And investors don’t enter on January 1 and exit on December 31. 

Most investors stay invested for many years, contributing, rebalancing, and adjusting as life unfolds. Annual returns are helpful snapshots, but they are not the full story. 

Long-Term History Tells a Different Story 

When you step back and look at market history over much longer periods, a different picture emerges. 

Over the past 100 years, the stock market has delivered average annual returns in the 10 percent range. Those returns did not come evenly or predictably. They came through wars, recessions, inflationary periods, political change, and financial crises. 

What’s especially telling is what happens when returns are viewed over rolling periods instead of single calendar years. 

Historically: 

• Rolling five-year periods have rarely produced negative outcomes. 

• Rolling ten-year periods have avoided negative returns altogether. 

• Over twenty-year periods, markets have consistently trended upward. 

This doesn’t mean markets are always comfortable. It means that time has historically played a powerful role in smoothing out short-term volatility. 

Volatility Is Normal (Even When Returns Are Strong) 

One of the hardest parts of investing is that uncertainty never disappears. 

There is always something to worry about. Inflation. Interest rates. Elections. Geopolitics. Recessions. Market valuations. New concerns replace old ones, even during periods of strong performance. 

This constant presence of concern is often described as the “Wall of Worry.” 

Market declines can feel dramatic in real time. Headlines are unsettling. Emotions run high. But when viewed over longer periods, those same declines often look smaller and more temporary than they felt in the moment. 

Volatility is not a sign that something has gone wrong. It is a normal feature of how markets have historically functioned. 

Why Timing the Market Rarely Works 

Periods of market stress often trigger the urge to act. 

When markets are rising, confidence tends to grow. When markets fall, fear can take over. Unfortunately, these instincts can work against long-term success. 

Market declines only become permanent losses if investors sell during downturns. A market drop can be painful. Selling at the bottom locks that pain in. 

History has shown that staying invested through downturns has generally been far more effective than trying to move in and out of the market based on short-term conditions. Timing requires getting two decisions right: when to exit and then when to reenter. Unfortunately, it’s tough to be right about both things consistently.  The more decisions one has to make, the more chances that one of those decisions will be incorrect. 

Patience, not precision, has historically been rewarded. This is not news to seasoned investors, but it can serve as a helpful reminder. 

Why Time Matters More Than Timing 

One of the main reasons long-term investing has worked is compounding. It’s also one of the most misunderstood concepts in investing. 

Compounding rarely looks impressive early on. Progress can feel slow and even discouraging. The benefits tend to appear later, often after long stretches of patience. 

The table below illustrates why. 

This example starts with a single penny that doubles each day. For many days, very little appears to happen. Then, near the end, growth accelerates rapidly. Most of the impact occurs late in the process, not early on. 

Markets don’t compound in such a clean or predictable way, but the principle is the same. Returns build on prior returns. Reacting to short-term market movements can interrupt that process before it has time to work. 

Where Long-Term Growth Has Historically Come From 

Over long periods, different asset classes have played very different roles. 

Stocks, bonds, and cash each serve a purpose, but they have not contributed equally to long-term growth. That difference may not feel dramatic year to year. Over the decades, it has become significant. 

Historically, stocks have delivered higher long-term returns than bonds or cash, though with greater short-term volatility. Bonds have provided income and stability. Cash has offered liquidity and safety, but very limited to long-term growth. 

This isn’t about choosing one asset class over another in isolation. It’s about understanding what each is designed to do, and how time horizon influences which role matters most. 

What This Means for Different Investors 

While the principles of long-term investing are consistent, how they apply can differ depending on the stage of life and personal circumstances. 

Investors Working with an Advisor 
During volatile periods, one of the most valuable roles a professional investment advisor plays is helping their clients maintain a long-term perspective. Having someone to call when headlines feel overwhelming can help prevent emotional, knee-jerk reactions that derail future goals. 

Older Investors (Late 70s, 80s, 90s) 
For many mature investors, the priority is ensuring that living expenses, healthcare needs, and emergencies are covered first. Once those needs are secured, remaining assets may still be invested with longer-term goals in mind, often for the benefit of children, grandchildren, or charitable causes. Growth assets can still have a place when time horizons extend beyond the investor alone. 

Pre-Retirees (50s–60s) 
The same principles apply, but emotional comfort matters. If market volatility causes ongoing stress or sleepless nights, portfolio adjustments may be appropriate. Investing should align not only with long-term goals but also with your risk tolerance and the ability to stay disciplined during uncertainty. 

When Should Investors Be Nervous? 

Market volatility alone is not usually the reason for concern. The bigger risks often come from misalignment. 

Investors may want to pause and reassess if: 

• Invested funds are needed for near-term expenses 

• Emergency savings are insufficient 

• Portfolios are heavily concentrated in a single asset or risk 

• Market swings create pressure to sell at the wrong time 

Investing money that may be needed soon increases both financial and emotional risk. A thoughtful plan matters more than any market forecast. 

The Bigger Picture: Investing Is Only One Part of a Financial Plan 

Market investing works best when it’s part of a broader financial strategy. 

That strategy typically includes: 

• Emergency reserves 

• Protection for short-term needs 

• Thoughtful management of debt 

• Long-term investments aligned with long-term goals 

When these pieces are in place, market volatility becomes easier to tolerate and less likely to derail progress. 

What This Means for 2026: Temper Expectations, Stay the Course 

While we can’t see the future, investors should not expect or depend on 20 percent returns every year. Volatility is unavoidable. Uncertainty is constant. 

What history has shown, again and again, is resilience. Markets have moved through wars, recessions, inflationary periods, and crises of all kinds. Long-term discipline, perspective, and planning have consistently mattered more than short-term predictions. 

Looking into the past doesn’t tell us exactly what 2026 will bring. It does help clarify how to respond when uncertainty shows up, which is often the more important question. 

For long-term investors, staying aligned with a thoughtful strategy remains one of the most reliable ways to navigate whatever lies ahead.