Will You Be OK If Stocks Stumble? | The Informed Investor 26

Jan 2, 2026

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Episode 26: Can anyone accurately predict when the stock market will hit a rough patch?

Not likely.

Although the market's long-term annualized return sits just above 10% and good years are more common than bad years, unexpected outcomes are not unusual.

Which means holding a portfolio suitable for all market environments probably makes sense for most investors—as does conducting an investing "fire drill" to determine whether your portfolio is prepared for the unexpected.

The 2000–2009 period, often termed the "lost decade," offers a helpful reminder. The annualized return for the S&P 500 was –0.9%. But in 2000 did anyone expect they would lose money over the next 10 years, especially after the index gained an annualized +18.2% in the previous 10 years?

Again, not likely.

Non-US stocks see similarly unexpected outcomes.

During that lost decade in the US, the MSCI All-Country World ex USA index, a widely followed international stock index, gained an annualized +2.7%.

Then there's Japan, where the stock market peaked in 1989 and proceeded to go nowhere for the next 28+ years.

More recent evidence confirms that investors should expect the unexpected.

In 2021, 2023, and 2024, the S&P 500 Index gained more than +25% each year. Through late December of 2025, its year-to-date return was north of +18%. But in 2022 the index lost –18.1%. Note that none of those returns is close to the long-term average.

The fact is that stocks often deliver surprising results. Bonds do too. Another example: From 2000 to 2020, the annualized return for the S&P 500 was +6.6%, far below its long-term average. Meanwhile, the Bloomberg U.S. Government Bond Index Long gained +7.8%, higher than its long-term average.

In Episode 26 of The Informed Investor, Dimensional's Mark Gochnour, Head of Global Client Services, Wes Crill, PhD, Senior Client Solutions Director, and Jake DeKinder, Head of Client Communications, examine the high volume of surprises that come with investing and explain why investors should set their expectations accordingly.

LINKS FROM TODAY'S EPISODE:

The Informed Investor: Feedback Survey https://www.dimensional.com/us-en/informed-investor-survey

"The Informed Investor" on YouTube https://www.youtube.com/playlist?list=PLCyJr6FFig-h1mA7rVP7Mbk0irFw2wA90

Dimensional Fund Advisors Shorts on YouTube https://www.youtube.com/@dimensionalfundadvisors/shorts

Mark Gochnour on LinkedIn https://www.linkedin.com/in/mark-gochnour-9a23598a/

Wes Crill on LinkedIn https://www.linkedin.com/in/wes-crill-77a49417/

Jake DeKinder on LinkedIn https://www.linkedin.com/in/jake-dekinder-cfa-4105b98/

Learn more at https://www.dimensional.com/

Past performance is not a guarantee of future results. Indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio.