MW There's a 68% chance the stock market ends the year higher. Why the headlines shouldn't disrupt your portfolio.

By Mark Hulbert

Blocking out the daily noise gives you a clear edge over short-term chaos

Stock investors historically have better-than-average odds of a yearly gain.

There's a 68% probability that the U.S. stock market will be higher at the end of this year.

This upbeat assessment has nothing to do with if, when and how the war in Iran gets resolved, the price of oil (CL00) (BRN00), inflation, the November midterm elections, SpaceX's IPO $(SPCX)$ or any of the other events that are dominating the financial news.

The 68% odds simply reflect the percentage of calendar years since the Dow Jones Industrial Average DJIA was created in 1896 in which the Dow rose from July through December.

I have been unable to find any objectively defined subset of years since the late 1800s in which the stock market's second-half probability was significantly higher or lower than this all-year average.

This is illustrated in the chart above. There are cases where the second-half odds for the stock market are slightly higher or lower than the all-year average. Yet none of the differences shown in the chart are significant at the 95% confidence level that statisticians often use when assessing whether a pattern is genuine.

These results don't mean that news doesn't matter to the stock market. But it's only over longer horizons where indicators boast significant forecasting records.

Consider a statistic known as the "R-squared," which measures the degree to which a given stock-market indicator is able to predict or explain the market's future return. At the one-year horizon, the R-squared is zero for the Buffett Ratio - despite it being "probably the best single measure of where valuations stand at any given moment," as Warren Buffett claimed a number of years ago. The Buffett Ratio's R-squared grows to 6% when forecasting five-year returns and a highly significant 29% at the 10-year horizon. (The Buffett Ratio is the ratio of the U.S. stock market's total market capitalization to GDP.)

The stock market's returns over shorter-term time horizons are largely statistical noise. Note that this isn't inconsistent with equities exhibiting a long-term uptrend. That's why it can be true that the stock market has 68% odds of rising in any given six-month period, and that there is zero predictability for which six-month periods will be part of that 68%. Statisticians refer to this pattern as a "random walk with an upward drift."

The lesson here is how difficult it is to time the market's short-term gyrations. Imagine being told last January that the next six months would include a Middle East war, surging oil prices and the highest U.S. inflation since the COVID-19 pandemic, to name just a few of the factors affecting investors. Not many of us would have heard those predictions and concluded that the U.S. stock market would be higher despite it all.

Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com.

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-Mark Hulbert

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June 12, 2026 15:47 ET (19:47 GMT)

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