Is There Ever Such a Thing as a “Normal” Stock Market?

“The only constant is change.” (Heraclitus)

Stock markets everywhere have been on a bit of a rollercoaster in 2025. Uncertainty around interest rates, geopolitical instability, and the unpredictability of US trade policy have made for a bumpy ride.

For any investor, these constant dips and gains can feel unsettling, even irrational. But before labelling current conditions as “abnormal”, it’s worth asking: what does a “normal” market really look like?

The illusion of “normal”

When stock prices move dramatically there’s a natural impulse to view them as disconnected from reality. For example, between the middle of February and the middle of April, the share price of Meta – the company that owns Facebook – fell by 34%.

This seems nonsensical. Nothing substantial happened at the company in this period. It was the same business in April as it was in February, so how could it suddenly only be worth two-thirds of what it was a few weeks earlier?

But thinking that way assumes that markets move in steady, predictable ways, and that there is such a thing as “normal” behaviour. The evidence tells a different story.

Take the S&P 500, for instance. Since it officially became an index of 500 stocks in 1957, its average annual return has been just over 8%. That’s the figure investors often use as a benchmark for long-term returns.

But in all that time, the index has only delivered between 7% and 9% — anything close to its average — in four calendar years. By contrast, it has produced annual returns between 19% and 21% five times. In other words, markets almost never return their average in any given year.

“Average” is not the norm

The same is true of the JSE. The “average” return from the local stock market for the last 95 years has been 13.5% per year. But in only two of the last 10 years has the annual return been anywhere close to that. In the other eight years, returns ranged from -8.5% to 29.2%, and none of them were even within the 10% to 20% range.

This highlights a key fact about markets: averages and norms are not the same thing.

Even over the longer term, the stock market is rarely stable. You only have to look at the annualised returns of the JSE over each of the past five decades to see this:

1970 to 1980 – 24.5%
1980 to 1990 – 20.1%
1990 to 2000 – 14.9%
2000 to 2010 – 17.8%
2010 to 2020 – 8.4%

As this shows, only the 1990s showed a return that was close to the market’s long-term average.

Why this matters

The reality is that what we often perceive as “unusual” market behaviour – such as the erratic swings we’ve seen in recent months – is actually completely normal. It’s part of the market’s nature to move in ways that are unpredictable, uncomfortable, and at times, seemingly irrational.

What sets successful investors apart is not their ability to predict these moves, but their ability to remain calm and stay the course when the future looks unclear and the market is all over the place.

This isn’t to say that market volatility should be ignored. It should be understood – and planned for. That means building portfolios that are diversified, investing with a long-term goal in mind, and not reacting emotionally to short-term market moves.

This isn’t just rhetoric. Because the truth is that it’s this unpredictability in stock markets that has always made equity investing worthwhile. The reason stocks offer higher long-term returns than cash or bonds is precisely because they are risky. And that risk is not an aberration – it is the norm.

Be okay with chaos

Over more than 100 years, shares have outperformed other asset classes in virtually every major market. That includes South Africa, where the JSE has delivered significant long-term value despite periods of intense political and economic turmoil.

So, investors should really expect – and accept – a degree of chaos. That’s not a failure of the system. It’s how the system works.

The stock market will always deliver surprises, and there will always be headlines that make you question whether your money is safe. But history shows that those who remain patient, focused on their goals, and disciplined in their strategy are the ones who ultimately succeed.

To discuss your investment portfolio, speak to us.

Jason Yutar: +27 83 415 9603 or
Zaheera Mohammed: +27 82 775 1898

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact us for specific and detailed advice.

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