Another Big Up Year With a Sharp Drawdown

Jeff Buchbinder | Chief Equity Strategist

Last Updated: November 26, 2025

With just 24 trading days left in 2025 and the S&P 500 up about 14%, a strong year for stocks appears highly likely. If you are skeptical, consider that we’re coming out of one of the best earnings seasons in years by the numbers, the fiscal stimulus from the One Big Beautiful Bill Act (OBBBA) that kicks in after New Year’s is fast approaching, and the holidays are typically favorable for stocks from a seasonal perspective.

Of course, every year is different, but one element of the path for stocks this year that is quite common is the fact that stocks suffered a correction on the way to strong gains. As you can see in the “It’s Not Over Yet, But 2025 Looks Like Another Year of Big Gains and a Large Drawdown” chart, the S&P 500 experienced a drawdown of 18.9% this year but is actually up more than 13% for the year. This pattern is not uncommon, as the chart illustrates. In fact, the average drawdown in a given calendar year has been over 14% since 1980, while the S&P 500 has gained an average of 10.7% per year during that time. Double-digit intra-year declines often come with double-digit annual gains, one of the most powerful messages in investing. It’s easy to get scared out of the market when volatility arrives, so those investors who keep this pattern in mind should be more confident holding on through the tough times.

Volatility is like a toll that investors pay on the road to attractive long-term returns. This year offers us this powerful lesson once again.

It’s Not Over Yet, But 2025 Looks Like Another Year of Big Gains and a Large Drawdown

Source: LPL Research, FactSet 11/25/25
Disclosure: Past performance is no guarantee of future results. All indexes are unmanaged and can’t be invested in directly.

It’s also instructive to group annual returns and stack them, as we’ve done in the “Positive Years Dominate Stock Market History” chart.

Positive Years Dominate Stock Market History

S&P 500 Performance (1950-2025)

Down 25% or More	-25% to -15%	-15% to -5%	-5% to +5%	+5% to +15%	+15% to +25%	Up 25% or More
2008	2022	2018	1960	2016	2023	2024
1974	2002	1957	1994	1993	2020	2021
	1973	1966	2011	1968	2017	2019
		2001	1970	1959	1972	1980
		1962	1978	2004	1951	1985
		1977	1984	1965	1983	1991
		1969	1987	1949	1963	1955
		2000	1956	1971	1976	2003
		1981	2005	2014	1999	1998
		1953	2007	1952	1967	1989
		1990	2015	1979	1996	2013
			1992	1988	1950	1997
				2010	1961	1975
				1964	2009	1995
				2012		1958
				2006		1954
				1986
				1982
				2025*

*2025 price gain for the S&P 500 is year to date through 11/24/25. Data series: 1950-Present.
Source: LPL Research, FactSet 11/25/25
Disclosure: Past performance is no guarantee of future results. All indexes are unmanaged and can’t be invested in directly. The inception of the S&P 500 Index is 1957. Performance for the index before that reflects that of the predecessor index, the S&P 90.

Over 75 years for the S&P 500 (and its predecessor) and stocks have only been down 25% or more twice — in 1974 and 2008. Only five times total has the index lost over 15% in a calendar year. When those outliers — all associated with skyrocketing inflation, recessions, financial crises, or interest rate shocks — are removed, the picture that emerges is clear. Stocks usually go up.

Historically, the S&P 500 has done better than a 5% loss in a calendar year 79% of the time, with gains 75% of the time. Over all three-year rolling periods by month since 1950, the S&P 500 was higher 85% of the time. Over 10 years, those odds go up to 92%, and that is excluding dividends, which makes these numbers even better. Bottom line, longer time frames than a year produce even higher frequencies of gains, making staying the course the best approach in most market environments.

Important Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

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Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

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High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings of commodities will result in significant volatility in an investor's holdings.

This research material has been prepared by LPL Financial LLC.

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Jeff Buchbinder

Jeff Buchbinder, CFA, provides the top-down view of the stock market for LPL Financial Research. He has over 25 years of experience in equities.