Is this opportunity or time to panic?

Is this opportunity or time to panic?

Every time the stock market goes into a correction, I look at this great stat by @RyanDetrick from 2015. (See table below)

Stat from 2015. The % of times the S&P 500 corrected a certain amount from 1960-2015

Although the table above is a little outdated, the numbers are still similar today. The S&P 500 on Monday finished the trading session down -20% from all time highs. According to the data above, this has only happened about 17% of the time from the years 1960-2015. In other words, we are in some rare times as the S&P 500 doesn’t have corrections like this very often.

On Monday, December 24, 2018, the S&P 500 closed at 2351.10. This is down -20% from its all time highs in September. Here is a monthly chart of the S&P 500 going back to 1985. (See chart below)

Monthly chart of the S&P 500 going back to 1985. As well as some of the corrections that we’ve seen since 1985

This is the biggest correction in the S&P 500 since 2011. This feels more like a 2011 type market to me, but time will ultimately tell. Could there be some systemic risk out there that could cause this correction to get worse? Yes, but it’s important to remember the long term outlook for the stock market is incredible!

The final chart shows how incredible this decline has been thus far. (See chart below)


Monthly RSI on the S&P 500 was at 87 earlier this year. It’s now all the way down to 41. The monthly decline is also in rare company

I leave you with some quotes to think about going forward from the great Sir John Templeton:

“If you never invest with borrowed money, then you can always be comfortable.”

“Have patience, be a long term investor. Be prepared financially and psychologically to live through a series of bull markets and bear markets. Because in the long run, common stocks will pay off enormously! The next bull market will carry share prices far higher than this one.”

Thank you for reading!

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2018 Year end market review

2018 Year end market review

VIX futures! History is made!

VIX futures! History is made!