The equity markets continue to move upward at a pretty exciting clip this week. Using the S&P 500 as a proxy for the overall market, current levels are more than 20% higher than one year ago: 20% seems like a big number, right? I was curious how many times the S&P 500 had shown year over year gains of 20% or more, and so I did a little home work. With an historical data file download for the index from Yahoo's Finance page, I pulled out the price of the index on the first market day in January for each year going back to 1950. Using this subset of data and a simple spreadsheet calculation, I found that the S&P 500 had gained (from one January to the next) 20% or more 12 different times. That's 12 times in 63 years. If you loosen up the criteria a little to 10%, the number jumps to 32 times the index gained at least that amount in a year over the 63 years studied. Of course, that means that there were many years that came in at less than 20% or even 10%. Using only this January data, there were 47 years with a positive return of any amount, meaning there were 31 years with some gain but less than 10%. And then there are the years with no gain or even a loss. The worst yearly return for the data in this study was for the period between January 2008 and Jan 2009... A year over year loss of 37.58%! (in the Yahoo data, they show a number more like -40%). But how common are double digit losses? Diving back into the data, it looks like there were 3 instances of a year over year decline of 20% or more, and 7 instances of a 10% or greater fall.
What can we take away from this data? There are a few concepts I would like to highlight:
Comments are closed.
|
AuthorDavid R Wattenbarger, president of DRW Financial Archives
January 2021
Categories |
FCL LLC (“DRW Financial”) is a registered investment advisor offering advisory services in the State(s) of TN, GA, IL, OK and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. The presence of this website on the Internet shall not be directly or indirectly interpreted as a solicitation of investment advisory services to persons of another jurisdiction unless otherwise permitted by statute. Follow-up or individualized responses to consumers in a particular state by DRW Financial in the rendering of personalized investment advice for compensation shall not be made without our first complying with jurisdiction requirements or pursuant to an applicable state exemption.
All written content on this site is for information purposes only. Opinions expressed herein are solely those of DRW Financial, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to other parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. |
Forms ADV, Privacy Policy, and additional disclaimers may be found here