Market Update | March 26, 2020

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.
– Charles Dickens, A Tale of Two Cities

March 18, 2020, marked the eighth straight day the S&P 500 closed with a move greater than 4%. Want to guess the last time that happened? Never. Welcome to history in the making.

Last week the S&P 500 fell by 14.95% and the Dow Jones was down 17.29%1. But, before any of us should get too worked up over a bad week, our team looked back at a century’s worth of market data to see what we can learn from history.

  • The market falls roughly 10% about once a year
  • Every 4–5 years we have experienced a 20% drop
  • Every decade the market has a drawdown of 30%+ peak to trough

So while these past few weeks have not been fun, it is good to remind ourselves that historically we see a 30%+ drop in the market about every ten years. Through Friday (3/20/2020) the S&P was down 28.33% and the Dow was down 32.41%. The last time we saw a drop of this magnitude was eleven years ago during the Financial Crisis of 2008–2009.

Some of the other notable bear markets as measured by the S&P 500 include:

  • 2007–2009: down 59% over 27 months
  • 1973–1974: down 48% over 21 months
  • 1929–1932: down 86% over 34 months

So while the recent selling has been ferocious, this isn’t the worst of times… yet.

Monday this week started down and then Tuesday (3/24/2020) we saw the largest single-day gain in the Dow since 19332. Today, as we write this market update, the Dow and S&P 500 are both up. The word “ whiplash” comes to mind... read full market update here