Over the course of this year, we have spoken and written numerous times about how rare of a year 2017 was in terms of market volatility. With US markets rising around 20% and foreign markets rising nearly 30%, investing seemed risk free and easy.
While us saying this is one thing, we wanted to offer some additional perspective and evidence on what has and continues to transpire.
Days like yesterday (Thursday, 10/25) give hope that the drawdown is over and a recovery has begun, but the reality is that we simply do not know when the recovery will fully take stride, and there very well may be more turbulence along the way.
First and foremost, for those that want the deeper dive, here is a link to a recent article by Larry Swedroe, the Director of Research for the BAM Alliance: An Awakening Bear? I highly recommend it for those that have the capacity and interest in understanding further. He has been at the forefront of BAM and the investment research community for decades, and is among the rare people that is extremely well respected in both the academic and investment communities. Further, his commentary is always specific to the style of investing we employ.
Among the many notable comments Larry provides in his article, he offers the following chart of market declines of 5% or greater during a calendar month since 2009:
In essence, these drops are not all that uncommon. In fact, prolonged drops that can last several weeks are not either, as evidenced by the consecutive months in 2010 and 2011. In addition, the 2016 decline actually lasted well into February, but had recovered by the end of the calendar month and therefore, is not included.Continue reading “Additional Comments on the Market Drawdown”