No one really knows what’s in store for markets in 2023, but investors can assume returns are unlikely to be average. That’s not because 2023 will be freakishly unusual – it’s because average returns are very rare.

Historically, US stocks have averaged annual gains of around 9 per cent – one reason, perhaps, why analysts routinely forecast high single-digit gains. However, Ritholtz Wealth Management’s Ben Carlson notes that since 1928, there has only been one year – yes, one – when returns were in the 8-10 per cent range. Usually, stocks are “up big or down big”, with 70 per cent of all years seeing double-digit gains or losses.

Luckily for investors, stocks gained at least 20 per cent in more than a third of all calendar years. However, lousy years are also not uncommon – almost half of all down years saw losses of 10 per cent or worse. Even loosening the criteria regarding what constitutes average returns doesn’t change things to any great degree. Over the last 123 years, says Jeroen Blokland of True Insights, there have only been 11 years where the Dow Jones Industrial Average returned between 5 and 10 per cent.

So don’t be surprised if returns are anything but average in 2023. As Blokland puts it, the average return doesn’t exist.