Realized market returns are driven by the difference between investor expectations and the events that actually transpire. If reality pans out better than expected, markets may deliver strong returns along the way. On the other hand, market returns may be disappointing if developments are worse than anticipated.

The global MSCI All Country World IMI Index returned 21.6% in 2023. That’s three times its annualized compound return since June 1994.1 Such an outsized return suggests investors’ expectations for 2023 were exceeded. Think about that for a moment: We’ve had major geopolitical conflicts, a US banking crisis, deteriorating fiscal health for many countries, and yet, on balance, outcomes were better than what markets expected at the start of the year.

This is something to keep in mind when reading forecasts for 2024. If predictions (good, bad, or indifferent) come to fruition, stocks should have a positive expected return.


1. The annualized compound return for the MSCI All Country World IMI Index (net div., USD) from June 1994–December 2023 was 7.2%.

Expected return: The percentage increase in value a person may anticipate from an investment based on the level of risk associated with the investment, calculated as the mean value of the probability distribution of possible returns.


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Investments involve risks. The investment return and principal value of an investment may fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original value. Past performance is not a guarantee of future results. There is no guarantee strategies will be successful.

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