Third Time's the Harm

Matthew Allgood |

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As we close out 2024 and step into 2025, many investors are asking what kind of year lies ahead. With the S&P 500 delivering over 20% returns for the second consecutive year, history suggests caution may be prudent. Past instances of back-to-back 20%+ years have often been followed by sharp drawdowns, averaging over 20%, as highlighted in the accompanying chart. 

While history doesn’t guarantee the future, it reminds us that markets can shift quickly. This is why we take a RiskFirst® approach to navigate potential volatility while preserving long-term opportunities.

Third Time’s the Harm

Max Drawdown in Year Following Two Consecutive Years of 20% + Market Gains

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Sources: Bloomberg, Redwood. As of 12/31/2024. Date Range 1930 – 2024.

Regards,

Allgood Financial

Disclosure: This piece is for informational purposes only and contains opinions of Redwood that should not be construed as facts. Information provided herein from third parties is obtained from sources believed to be reliable, but no representation or warranty is made as to its accuracy or completeness. Charts and graphs are for illustrative purposes only. Discussion of any specific strategy is not intended as a guarantee of profit or loss. Past performance is not a guarantee of future results. The objectives mentioned are not guaranteed to be achieved. Investors cannot invest directly in any of the indices mentioned above. Diversification of asset class is not a guarantee against loss. RiskFirst® is a registered trademark of Redwood Investment Management, LLC.

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