The stock market is on pace for its 3rd straight winning year. With one quarter left in 2025, the question is whether 2026 can extend the streak to a 4th year. To answer that, we’ll look back at prior 3-year streaks to see how often they were followed by gains in Year 4. We’ll also examine the average returns when the streaks continued — and what happened when they came to an end. Let’s dive in.
The data on 3 year win streaks
Barring a sharp decline in the final months of 2025, the S&P 500 will finish higher for a 3rd straight year. That would mark the 12th time since 1928 the index has risen three years in a row. Historically, the average and median cumulative returns across these 3-year streaks are 64% and 56%, respectively. The current streak, which began in 2023, is on pace for a 3-year cumulative gain of 65% — almost exactly in line with the historical average.
One interesting note is that the current 3-year win streak could potentially be just the 4th time that all three years in the win streak returned 10% or more. In those “powerful” instances, the average cumulative return rises to 79%. So from that perspective, the current cumulative return is lower than the comparable average. By comparison, the current run looks tame next to the 1995–1999 dot-com surge, when the market’s cumulative gains were far greater. The market’s recent gains have been steadier, suggesting today’s streak may not carry the same bubble-like characteristics as the 1990s.
What about year four?
Now let’s look at what the 4th year after a 3-year win streak looks like. Since 1928, we have 11 “year-4” outcomes following a 3-year win streak. 6 of those 11 instances (55%) had a positive year-4 return. 5 of the 11 (45%) had a negative year-4.
- The average return for all year-4 outcomes is +6.7%
- The average positive year-4 return is +21.80% (4-year win streak)
- The average negative year-4 return is -11.50% (3-year win streaks ends)
The takeaway:
The odds of a 4th straight yearly gain have been slightly better than a coin flip: 55% positive vs. 45% negative. When the market does rise in Year 4, the gains are usually big — with the lone exception of 1994, every positive Year 4 returned at least 15%. On the flip side, when the market turned negative, the declines were relatively modest, averaging –11% rather than a crash.
Taken together, the data suggest a simple expectation for 2026: the market is most likely to be either up about 15% or down around 10%.
Looking ahead even more
We were curious if there is anything in the historical data that says, “When a 3-year win streak ends, the market puts in a major top and crashes lower.”
Encouragingly, there’s not much in the data that says this is the case. For example, the most recent year-4 loser (2022), was followed by a 26% gain in 2023. The only year that snapped a 3-year win streak and ushered in a bear market was 1973. The S&P 500 fell 14% that year and then fell another 26% in 1974. The negative stretch of the 1970s was marked by persistently high inflation and a President tampering with Fed independence. It’s worth noting that those same two headlines could easily be written today.
Year-5 data, depending on if there was a 4-year win streak or a 3-year win streak that ended in year-4:
The bottom line
The stock market is on pace to rise for a 3rd year in a row. Such streaks may cause some to wonder, “how much higher can the market go?” Well, the data contains good news: when stocks rise for a 4th year in a row, the gains tend to be very strong. When stocks snap a 3-year win streak, the losses have not been dramatic. In addition, 3-year win streaks have generally occurred in the midst of very strong 5-year periods overall.
For long-term investors, that backdrop is encouraging. For those nearing or in retirement, however, this may also be an opportunity to rebalance portfolios — locking in some of the gains from this streak and shifting a bit more conservatively if needed. That way, they don’t have to rely on whether 2026 delivers a 4th straight up year in order to feel secure. Either way, this 3-year win streak has already given investors plenty to work with.
Don’t want to miss anything?
Subscribe to our monthly newsletter for market insights.
