The declines of the type that the market has seen over the last month have resulted in some commentators bringing the crash adjective off the shelf. While that may be too severe (at least for what's happening in the equity markets), we would note that the current decline off of the October 2007 highs is the fifth fastest decline of 15% or more from an all-time high in the S&P's history. Below we highlight each of the five periods as well as how the S&P 500 performed going forward.
Looking back at the past provides a mixed picture of what to expect over the coming months. As shown, while the periods covering 1929 and 1987 top the list, when they reached the 15% threshold they were still in free fall and hadn't yet 'crashed'. In the most recent two periods (1990 and 1998) however, once the 15% threshold was reached, the bulk of the declines were already over.
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