Investment tip: Stocks won’t go up forever

Don’t let the stock market’s one-way climb in 2017 fool you. Or, for that matter, the six consecutive up days to kick off the new year.

Sure the S&P 500 stock index gained

19.4% last year with nary a dip and is up nearly 3% already in 2018.

But history shows stocks do not often go a full year without a sizable drop that reminds complacent investors that, yes, stocks are risky despite their propensity to go up more than they go down.

If you strip out last year’s tiny 2.6% pullback, the S&P 500 hasn’t gotten through a year in the past 20 without a temporary drop of at least 5.6%, data from Oppenheimer Equity Research show. The biggest intrayear decline, or “drawdown,” was 47.7% in 2008, when the financial crisis had people questioning if the financial system was strong enough to avoid collapse.

Declines are biggest during bear markets, such as 2008-2009 and the plunge after tech stocks crashed in 2000. The S&P 500 suffered downdrafts of 16.6% in 2000, 29.1% in 2001 and 33% in 2002.

But even in years during the current bull market, which began in March

2009, the market has suffered big bumps along the way. At one point it fell

15.6% in 2010 but still finished the year up nearly 13%. Similarly, in 2011 it temporarily fell 18.6% but rebounded to finish the year flat. At the start of 2016 it fell

10.3% but finished the year 9.5% higher. The takeaway: “Rallies don’t proceed upwards in a straight line,” says John Stoltzfus, chief investment strategist at Oppenheimer. “Also, past periods of volatility have often proven to be buying opportunities.”

Stay tuned.