The Stock Market Did Something for Just the Third Time Since 1950. Here's What History Says Will Happen in 2025.

The stock market has done something extraordinary, an event that has occurred only three times since 1950. As investors, we can't help but wonder what this means for the future, especially as we approach 2025. Let's delve into the historical data and explore what might happen next.



In 2021 and 2022, the S&P 500 index posted average returns of -0.33% on the Thursday before triple witching Friday and a return of -0.52% on the actual triple witching day. During full triple witching weeks going back to 2017, the S&P 500 has an average return of -0.53%. This suggests that the activity surrounding triple witching generates heavier selling pressure on the overall market.



As we look ahead to 2025, we can expect a similar reaction to triple witching events. The four triple witching days in 2025 are March 21, June 20, September 19, and December 19. Market participants should anticipate increased trading volume and volatility, particularly during the final hour of trading (the "triple-witching hour"). Arbitrage opportunities may arise from price inefficiencies, and there could be potential short-term weakness in stocks, although market performance may vary from year to year.

To navigate these events, investors can consider the following strategies:

1. Stay Informed: Keep up-to-date with political developments and their potential impact on the markets. This can help you anticipate and prepare for any market reactions to political events.
2. Diversify Your Portfolio: Diversifying your portfolio across various asset classes, sectors, and geographies can help reduce the impact of political events on your investments.
3. Implement Risk Management Strategies: Use risk management strategies, such as stop-loss orders, to automatically sell securities if they fall below a certain price. This can help limit potential losses if political events cause a sudden market downturn.
4. Maintain a Long-Term Perspective: Maintain a long-term investment horizon and avoid making impulsive decisions based on short-term political developments. Historically, markets have recovered from political events and continued to grow over time.

In conclusion, while the stock market's recent behavior is rare, history provides valuable insights into what we might expect in the future. By staying informed, diversifying our portfolios, implementing risk management strategies, and maintaining a long-term perspective, we can better navigate the challenges and opportunities that lie ahead in 2025.