LS&P 500 has delivered gains of 15% or more for three consecutive years only eight times since 1926.
There is no clear historical pattern as to what happens in the fourth year after a hot streak for the index.
Investors should focus on a more important S&P 500 trend.
10 stocks we like better than the S&P 500 Index ›
A lot can happen with the stock market during the last two and a half weeks of the year. Stocks may tank in a year-end collapse. A sharp rise can begin. Or the S&P 500(SNPINDEX: ^GSPC) it could end 2025 with gains close to where it is now.
If I had to make a bet, I’d put my money on the third scenario happening. Assuming I’m right (or I’m wrong but a strong Santa Claus rally takes care), the S&P 500 will do something that’s only happened eight times in the last 100 years.
What is this relatively rare feat that the S&P 500 may be about to pull off? Delivering returns of at least 15% for three consecutive years.
The roots of the S&P 500 as a daily composite index of stocks date back to 1926. It initially tracks only 90 stocks. Over the following years, more stocks were added. In 1957, the S&P 500 was established in its current form with the stocks of 500 American companies. (By the way, the number of stocks in the index is higher than 500 because of a few companies that list several classes of shares.)
Over its 100 years as a daily stock index, the S&P has gained at least 15% roughly half the time. However, stringing together three consecutive years of such income has proven to be much more difficult.
As mentioned before, this feat has only happened eight times. Since the S&P 500 has existed in its current form with 500 members, a three-year streak of returns of 15% or more has occurred only four times.
The predecessor of the S&P 500 first delivered a return of at least 15% for three consecutive years between 1942 and 1944. With the United States still in a wartime economy, the index rose another 36% in 1945. That return surpassed the second three-year streak of gains of 15% or more.
However, history buffs know that World War II ended in 1945. The factories that had been working at full capacity to produce equipment, supplies, and weapons needed for the military were reduced. In 1946, the early version of the S&P 500 was down about 8%.
A few years passed before another bull market began. From 1949 to 1951, the index again rose by at least 15% each year. This momentum continued in 1952, with an increase of 18%, providing another three-year streak of gains of 15% or more. But the excess of the Stock Exchange decreased a little. In 1953, the predecessor of the S&P 500 fell by almost 1%.
Investors had to wait more than four decades for the next S&P 500 hot streak. Between 1995 and 1997, the index increased by more than 20% each year. It jumped over 28% in 1998 and roughly 21% in 1999. The roaring 90s provided three consecutive three-year periods of returns of 15% or more. Then the dot-com bubble burst, with the S&P 500 falling 9% in 1999.
This brings us to the last official three-year streak of returns of 15% or more. This took place between 2019 and 2021, with the so-called “Magnificent Seven” stocks leading the market. However, a bear market in 2022 ended the fun for investors, as the S&P 500 sank 18%.
Image source: Getty Images.
You may have noticed that there is no clear historical pattern as to what happens after the S&P 500 rises by 15% or more for three consecutive years. In four cases, the index maintained its momentum. In the other four periods, however, the S&P 500 declined at the end of a three-year winning streak.
What’s in store for 2026 if the S&P 500 ended 2025 down at least 15%? If history is any guide, there is no way to know. In fact, there is no way to know how stocks will perform, even if we ignore all historical data.
The most important trend that investors will notice is that the S&P 500 has risen more than it has fallen. Whatever happens next year, buying and holding the best stocks should pay off in the long run.
Before you buy a stock in the S&P 500 Index, consider this:
the Motley Fool Stock Advisor a team of analysts has identified only what they believe they are 10 best stocks for investors to buy now… and the S&P 500 Index was not one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix I made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you would have $513,353!* Or when Nvidia I made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you would have $1,072,908!*
Now, it is worth noting Stock consultant total average income is 965% — a market-crushing outperformance compared to 193% for the S&P 500. Don’t miss the latest top 10 list, available with Stock consultantand join an investment community built by individual investors for individual investors.
See the 10 stocks »
*The Stock Advisor returns from December 8, 2025
Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
LS&P 500 Is Doing Something It’s Only Done 8 Times in 100 Years. Here’s What History Suggests Will Happen in 2026. was originally published by The Motley Fool
