Why History May Be on Our Side for a Strong Finish

We're coming off a strong eight months for the S&P 500 through the end of August. If you've been watching the headlines, you've probably also seen no shortage of reasons to worry that the good run is due to end. I want to walk through what history actually shows about years that start like this one, because the data tells a more encouraging story than the headlines usually do.

What We're Looking At

Going back to 1970, there have been 21 years — not counting this one — where the S&P 500 was up 10% or more through the end of August. That's a meaningful sample size, and it lets us ask a simple question: when the market has already had a strong first eight months, what tends to happen the rest of the way?

The short answer: 

Historically, strong starts have led to strong finishes. But not 100% of the time.

Important disclosure: Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal. The analysis below is for informational purposes only and does not constitute a recommendation to buy or sell any security.

Average S&P 500 returns by period, comparing all years since 1970 to the 21 years where the index was up 10%+ through August. Source: eSignal/Intercontinental Exchange, Inc.

The Numbers

• In all 21 of those prior strong-start years, the S&P 500 finished the year higher than where it stood on January 1 for that given year — a significant track record across more than five decades of data.

• The average full-year return in those years was roughly 23.0%, compared with about 9.4% across all years since 1970.

• From September through December alone, those years averaged a gain of about 4.4%, versus 3.2% for all years — and led to new highs in 18 of the 21 years (about 86% of the time).

  
  

It's Not a Straight Line — And That's the Point

The data comes with an important nuance: September and October themselves have historically been the choppiest months, even in strong years. September averaged a slight loss of about 0.1%, and October averaged about -0.3%, each positive only about half the time. The real strength in these years has tended to show up in November and December.

1987 is the clearest example of why that nuance matters. The S&P 500 was up more than 36% through August of that year — one of the strongest starts on record — and then October delivered Black Monday, a one-day drop that took the month down more than 21%. And yet 1987 still finished the year in positive territory. That's not a reason to expect every year to work out that cleanly. It's a reason to think carefully before making portfolio decisions based on a single month's headlines, good or bad.

What Could Change This Picture

History is not a guarantee, and I want to be direct about that. A geopolitical shock, an unexpected policy shift, a credit event, or something else entirely could change the picture for the rest of this year, the same way an outlier event has occasionally interrupted strong years in the past. We don't build plans around predicting when that might happen — nobody can do that reliably.

What This Means for You

None of this is a signal to change course based on a forecast. It's a reminder that a strong year so far is not, on its own, a reason for concern — historically, it's been closer to the opposite. If you're feeling uneasy about market headlines heading into the fall, that's a good moment to revisit your plan with us directly rather than react to any single week's news.

Disclosures: The S&P 500 is an unmanaged index, not directly investable, and does not reflect fees, expenses, or dividends. Past performance is not a guarantee of future results. Investing involves risk of loss.