Quick Perspective on Market Volatility

I’m hearing some concerns about the stock market the last few weeks from the general public. After all, the U.S. stock market (S&P 500 Index) closed yesterday about 12.5% lower than it started the year.

I’ve been consistently warning about extreme stock market valuations that make severe, sharp drops more likely. But the experience so far this year is not yet that severe, sharp drop I’ve been warning about. In fact, the decline so far is quite unremarkable in the context of history.

Let me illustrate… Continue reading “Quick Perspective on Market Volatility”

Bigger Price Swings in Both Directions

You may have noticed larger price swings in the market over the last couple months. Another term for this is “volatility.”

Increasing volatility is normal as markets transition from up-trends (bull markets) to down-trends (bear markets). And, actually, large price swings IN BOTH DIRECTIONS are characteristic of bear markets.

Now, it’s reasonable to expect to see most of the worst daily returns in history during bear markets. However, what I found far more interesting when doing my analysis is that most of the best daily returns also occur during bear markets. In fact, eight out of the ten best days in the market (1950 – 2018) occurred durinbear markets! Continue reading “Bigger Price Swings in Both Directions”

Volatility Update #3

As you know, I’ve been tracking three volatility-related record streaks in real-time with you. The first two streaks (1) number of consecutive days without a daily decline ended on January 29th, and (2) number of consecutive days without back-to-back 0.25% declines ended the following day.

Streak #3 was the number of consecutive days without a 5% correction. In Volatility Update #2 (January 30th), I mentioned that this streak would end before year-end, “and, maybe, even before the first quarter is over.”

Well, today, before the end of the first quarter, this streak finally met its end at a hair over 400 days. Continue reading “Volatility Update #3”