The Glass is Half . . .

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.

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