What the S&P 500's Historic 2025 Close Tells Us About 2026 – And a Cautionary Tale From 1928

The S&P 500 is about to make history. As 2025 winds down with just a few trading sessions remaining, the index is positioned to close above 6,600 for the first time ever—potentially even approaching 7,000. This marks a genuinely unprecedented milestone. But here’s the thing: while breaking records is rare, sustaining that momentum is far messier than investors hope.

When History Rhymes (and When It Doesn’t)

Looking back at previous instances when the S&P 500 finished a year at record highs reveals an interesting pattern. After the 1954 all-time year-end close, the index surged over 26% the following year. The 1980s and 1990s were particularly bullish—whenever the S&P 500 wrapped up the year at new highs (eight times in the '90s alone), six of those instances were followed by positive returns the next year, with four delivering double-digit gains.

The momentum thesis seems compelling. Bull markets do have staying power. The data backs this up: across all historical precedents, the S&P 500 rose more than twice as often as it fell in the year following a record year-end close.

But here’s where caution enters. Go back to 1928. The stock market lit up to finish that year on a high note—a small triumph before October 1929’s catastrophic crash. More recent examples complicate the narrative too. After the pandemic-driven rebound of 2020 and 2021, the index crashed nearly 20% in 2022. When record year-end closes are followed by declines, those drops tend to be double-digit percentage moves, not modest corrections.

The Ambiguous Case of Back-to-Back Gains

Here’s where 2026 gets tricky. The S&P 500 appears headed toward its third consecutive year of 15%+ gains—a feat that’s occurred only eight times historically. In those eight instances? The market was split down the middle. Half the time momentum persisted. Half the time it evaporated.

In other words, this is genuinely uncertain territory. No one can predict what happens next with confidence.

The Unsexy but Reliable Play

So what should investors actually do? The historical record suggests that short-term predictions are fool’s gold. What does work reliably is what it always has: buying quality stocks and holding through the noise. The S&P 500 has crushed bonds, commodities, and cash over decades. That long-term superiority isn’t negated by what happens in any single year—not in 1929, not in 2022, and not in 2026.

The real lesson from 1928 and every market cycle since isn’t that timing matters. It’s that time does.