"It should go without saying that the S&P 500 has been riding high over the last few years and has delivered one of the most impressive runs in market history. Over the past three years, the index has surged a whopping 80%, driven in part by artificial intelligence, falling interest rates, and ongoing corporate earnings growth. For investors who have stayed the course, portfolio balances have reached levels that might have seemed all but impossible to achieve a few years ago."
"Unfortunately, any exceptional performance like this in the market comes with something of a warning label. A three-year gain of this kind of magnitude with the S&P 500 has only occurred twice in the last 153 years of stock market performance. The first, the 1920s bull market, and the late 1990s tech boom both ended in devastating fashion with the Great Depression and the dot-com bust."
The S&P 500 surged about 80% over the past three years, driven by artificial intelligence, falling interest rates, and sustained corporate earnings growth. That three-year performance annualizes to roughly 21–27% per year, far above the long-term average near 10%. Such a magnitude of three-year gains has appeared only twice in 153 years: the 1927–1929 bull market and the 1995–1998 tech boom. Both prior episodes preceded severe market collapses—the Great Depression and the dot-com bust—making current outperformance a potential warning sign for elevated correction risk and underscoring the importance of risk management.
Read at 24/7 Wall St.
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