History Suggests Strong Market in 2005

If you’re a numbers person, a history buff, and an investor, you will most likely find the following numbers very bullish for the coming year on Wall Street. Now, I’ll be the first to point out that I really don’t think the numbers below will really have an effect on the stock market’s direction next year. But, they are interesting and should, at the very least, peak one’s curiosity as to whether or not it is simply a coincidence that years ending in a “5” have traditionally been great for investors.

Most of us know that the historical average for stock market returns has been about 10 percent per year. Interestingly, since the Dow Jones Industrial Average was created (1897 by Charles Dow), there has never been a year ending in the number “5” in which the Dow lost value. In fact, no such year has ever failed to beat the historical average of a 10 percent gain. In fact, these years have come and gone 10 times and the Dow has averaged a gain of 34.6 percent. I have not taken the time to investigate why this may be the case, but let’s hope the trend continues. Here are the numbers for the Dow:

1905: 38.2%

1915: 81.7%

1925: 30.0%

1935: 38.5%

1945: 26.7%

1955: 20.8%

1965: 10.9%

1975: 38.3%

1985: 27.7%

1995: 33.5%

2005: ???

10-Year Average: 34.6%