Investing

10 ways the last 10 years were remarkable for the stock market

Twenty/20

The 2010s will go down in history as one of the best decades for investors. It became cheaper and easier for everyday people to invest in the stock market, and the past 10 years were among the best ever for stock returns. Also, for the first time ever, the U.S. economy started and ended the decade without entering a recession.

Investors who stayed the course through the market's ups and downs were rewarded. If, at the start of the decade, you'd invested $500 in exchange-traded funds (ETFs) that track the major market benchmarks, that would have swelled to a value of at least $1,500 by December 31, 2019.

Here are 10 of the U.S. stock market's most remarkable accomplishments of the 2010s:

1. The longest and best bull market ever

The 2010-2019 period coincided with the longest bull market in stocks in history, which began in March 2009. During a bull market, stock prices are rising, and the major market benchmarks haven't experienced a decline of at least 20% from a high, on a closing basis.

In addition to being the longest ever, the bull market added another accomplishment in November 2019 by becoming the best in history. Through the end of 2019, the S&P 500 rose more than 370% during the current bull market run. Taking into account total returns, which assumes you reinvest dividends, those returns swelled to more than 490%.

2. The Dow Jones hit the 20,000s

Prior to the financial crisis, the Dow Jones Industrial Average set a record high in October 2007 of about 14,160. It took nearly six years for this index to surpass that peak, which it did in March 2013.

And then came 2017. The year was a record-busting one, with the Dow index blasting through numerous milestone levels, from 20,000 to 24,000. In the years since then, this 30-member benchmark has soared past the 28,000 threshold and is now less than 5% below the 30,000 level.

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3. The Fed cut rates three times

When the decade started in 2010, the Federal Reserve had just stopped cutting interest rates. They went from as high as 5.25% in 2006 to near zero by the end of 2008 as the Fed tried to stimulate activity during the Great Recession. (Policymakers cut interest rates when economic growth is slowing in an effort to stimulate activity by making it cheaper for consumers and businesses to borrow money.)

By the time the 2010s ended, Fed policymakers were back to cutting interest rates once again — but only after they'd raised rates in the 2015-2018 period to as high as 2.5%.

The three rate cuts implemented by the Fed were all in 2019. The intent was to spur borrowing in the face of slower growth.

4. Netflix surged more than 4,000%

It's tough to predict which companies will fare well over the long run and which won't. That's why many experts recommend investing in index funds that track broad market benchmarks, like the S&P 500, rather than trying to pick the winners.

Netflix comes out as number one among the top-performing stocks of the past decade with returns of more than 4,000%. And if you owned an index fund that included the streaming service, you benefited from its growth.

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5. Tech stocks worth five times an initial investment

The past decade saw transformations in technology, along with a huge popularity among investors for the related companies in the stock market. Among the highest flying growth stocks are the so-called FAANG group, which stands for Facebook, Amazon, Apple, Netflix, and Google parent Alphabet.

Tech stocks, as reflected by the Nasdaq Composite index, were the clear winners among the five major U.S. benchmarks in the past decade. If you invested $500 in an ETF that tracks the performance of the Nasdaq back in December 2009, that was worth five times the amount — more than $2,500 — at the end of the decade, according to calculations by Grow.

6. Only six corrections of more than 10%

In the 10 past years, investors have endured only six corrections, or times when the S&P 500 fell at least 10% from a prior high. Those types of market sell-offs happened less often in the past decade than you might expect from looking at historical data. Going back to 1928, Bespoke Investment Group calculates the average occurrence of a correction of at least 10% to be a little more than once a year.

These declines have happened as quickly as a span of 13 days (in early 2018) to as long as 157 days (back in 2011), according to data compiled by Yardeni Research.

The market over the past 10 years recovered from each of those slumps. That serves as an excellent reminder that even amid bumpiness, it's important to stay the course and not make any changes to your long-term investing strategy based on short-term events.

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7. From 19% down to a record high in just seven months

After hitting an all-time high in September 2018, the S&P 500 plummeted more than 19% by late December only to recover and hit a fresh record high in April 2019.

That correction is a great example of why it's important to stay invested for the long term: because every market downturn has ended with an upturn.

This particular correction and subsequent recovery, totaling about seven months, happened a bit faster than usual. The average correction for the S&P 500 has lasted four months while it's taken about four months for the market to recover from the sell-off, according to an analysis by Goldman Sachs and CNBC.

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8. Only eight 1% moves in 2017

Some bumpiness in the market is pretty typical: During the 2010s, the S&P 500 moved up or down by at least 1% on about 21% of trading days. And declines can be advantageous to long-term investors who can buy stocks at lower prices.

But 2017 was unusually calm, in addition to being the year that saw the Dow average bust through 20,000. That year, moves of at least 1% in either direction happened only eight times, or just 3% of trading days.

9. Nine straight quarters of gains

Not once but twice during the last decade, the S&P 500 rose for nine straight quarters. That doesn't mean the market was consistently up on a weekly or monthly basis, but the general trend over a three-month period was positive — and that's fairly unusual.

That said, these nine-quarter streaks weren't the longest such for the S&P 500. Between 1995 and 1998, this benchmark had a 14-quarter streak of gains.

10. The 10th best year of all time

Capping off the decade, the S&P 500 rose almost 29% in 2019 for the 10th best year of returns in history for this index. That was just behind 2013's nearly 30% gain and a smattering of years between 1930 and 1990.

While experts are forecasting more subdued gains in stock prices in 2020, they believe the market will continue rising in the year ahead.

January can be a particularly good time to invest money in the market. Still, it's always smart to stick with a predetermined strategy and continue adding money over time. This type of consistent, buy-and-hold approach means you don't have to worry about the day-to-day fluctuations in the markets.

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