The Glass is Half . . .
Published On: December 18, 2018
Written by: Ben Atwater and Matt Malick
- The S&P 500 has fallen about 13% from its high. The drop has occurred quickly and during a time of the year when the market usually does well.
- All of us are anxious about this drop. However, we need to stay the course.
- When trying to time the market, you are required to make two nearly impossible decisions – when to get out and when to get back in.
- A rebound can happen anytime (or not). We don’t know. Nobody knows.
- Volatility is part of investing. It is not new.
- On average, since 1980, the market has experienced a 14% correction every year!
- In 22 of the 38 years since 1980, the market has seen at least one correction of 10% or greater.
- In 13 of those 22 years, the market still ended the year with gains.
- Obviously, given the timing of this year’s drop, that’s unlikely. However, it still illustrates the market can turn quickly.
- Take 2009 as an example. The market fell 28% to start the year, but ended up 23%. That’s a 51% swing. It’s also the reason why people who got out of the market during The Great Recession never got entirely back in the market. As a result, they missed a giant rebound.
- In 1997, 1998 and 1999, the market saw intra-year drops of 11%, 19% and 12%, but ended the year higher by 31%, 27% and 20%, respectively.
- We can’t overstate the difficulty of timing the market. Things change quickly.
- In August people thought everything about the U.S. economy and the market was great. Now, only four months later, people are getting quite pessimistic.
- As we’ve been talking about for almost two years, we anticipate a challenging period ahead. This is all the more reason to continue to follow our discipline.