Developed markets: down years don't last.
Twenty two developed markets, 2011 to 2025. 114 negative market years, 99 unbroken losing runs. The same test we ran on emerging markets and US sectors, applied to the developed world.
Nearly nine in ten losing streaks are over in a single year.
There were 99 separate losing streaks across 22 developed markets, 2011 to 2025. 87 lasted a single year. None has ever run longer than three.
The first year back averaged 19.4 per cent.
Across 97 recovery years the median was 20.1 per cent. The weakest was the United Kingdom in 2016, flat at 0.0 per cent. The strongest was Finland in 2025 at 59.8 per cent.
Twenty two markets. Market leadership rotates constantly.
Every column is a year, 2011 to 2025. Every cell is a developed market, ranked from its best year at the top to its worst at the bottom, coloured by market. Click a market below to trace its rank across all fifteen years.
Twenty two markets, fifteen years, every rank in between.
In 2018, every single developed market fell. In three other years, none did.
Red shows how many of the 22 developed markets were negative that year. Green shows how many were positive. 2018 is the extreme case: all 22 fell together. 2013, 2017 and 2019 are the opposite: not one market fell.
Eleven of the fifteen years had a genuine mix, some markets falling while others rose. That mix is what a rebalancer needs to work with. The years with no mix at all, 2018 down together and three years up together, are the exceptions, not the rule.
What if you put the money into the developed markets that just fell?
Set a starting balance, choose a rule, and the model applies it every year from 2011 to 2025. Each 31 December it ranks the 22 developed markets on the year just finished, moves the whole balance into whichever ones the rule selects, and holds them for the next twelve months. The pale line is always the same benchmark: equal weight across all 22 markets, rebalanced annually.
| Year | Held for that year | Balance at 31 December |
|---|
Concentrating a balance into a handful of single country markets is an extreme position, shown here to test an idea against history rather than to suggest anyone should hold it. The model assumes rebalancing is free and instant, ignores fees, spreads, brokerage, tax and currency conversion to Australian dollars, and assumes every market was accessible to an Australian investor in every year.
Method and limits
Source. MSCI single country developed market indices, 2011 to 2025, USD total returns, via Novel Investor's international stock market returns table. Cross-checked against Total Money Management's own compilation: 328 of 330 overlapping year signs agreed, 88 of 95 recorded recovery figures matched within 1.5 percentage points.
What the check found. Italy is missing 2014 as a down year (it fell 9.0 per cent); its 2016 recovery figure was consequently misassigned, the true value belongs to 2014's own recovery in 2015. New Zealand is missing 2015 as a down year (it fell 5.4 per cent). Singapore's 2021 and 2023 recovery figures are mistyped. Switzerland's 2019 recovery figure is mistyped. Belgium is missing one recovery value outright, with one further figure that could not be matched to any run.
One claim we are not making. That every losing run was followed by a positive year is true but circular, because a run is defined as ending when a positive year arrives. The findings that carry real information are how long runs last and how large the recovery was.
What is not measured. Calendar year index returns before fees, taxes and currency conversion to Australian dollars, and assumes every market was accessible to an Australian investor throughout. Past returns are not a guide to future returns.
This newsletter is for informational purposes only and does not constitute financial advice. Total Money Management | AFSL 568642.
