Next year probably won’t be great for stocks, but it might be good

Next year probably won’t be great for stocks. But if history is any guide, 2014 still might be pretty good.

With the stock market wrapping up its best year in a decade, investors are worried about the risk of a long-overdue correction in 2014. There’s even growing talk of a market bubble.

But the fear is overblown, according to a study by S&P Capital IQ. Great years for the stock market, the report found, usually are followed by good ones.

Since 1945, there have been 21 years in which S&P rose more than 20%, according to the study.

The index generally kept rising the following year, by an average of 10%, the study found. That’s better than the market’s 8.7% average gain for all years since World War II.

The Standard & Poor’s 500 index is up 25% so far this year.

That doesn’t mean 2014 will be easy.

Every “good” year included a drop of more than 6%, and several years had more than one such decline.

Photos: Top 10 most corrupt countries

The market is overdue for a setback. The S&P has gone 26 months without a correction of 10% or more, far exceeding the average 18-month span since 1945, according to the report.

“We believe a correction is not only possible, but is also probable in the year ahead,” the study said. “However, we don’t think a new bear market will ensue.”

ALSO:

A new year is dawning and with it a new round of financial resolutions

Income gap is getting worse for people in prime earning years, study says

Fewer people are blowing 401(k) retirement money on meaningless purchases

Twitter: @LATwalter