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How Volatile Can The Stock Market Be?

   

 

The stock market as represented by the S&P 500 can be extremely volatile, as evidenced by the tables below.  Returns rising by 92% in three months or down -33.0% in three months are not the norms most advisors grew up in the business with.  Imagine what clients would do.  CEG Worldwide, LLC and Dimensional Fund Advisors were kind enough to provide the figures below which were originally published in 2002 in a publication created by CEG Worldwide, LLC entitled Essential Client Communication written by John J. Bowen, Jr., Sharla D. Hamil and Russ Alan Prince.  These figures provide for an interesting study.  In short, the market can be a great deal more volatile than most advisors are aware of.

 

DOWN MARKET CYCLES

 

                   Period                             Number of Months                 S&P 500 Total Return

 

September 1929 to November 1929                     3                                           -33%

 

April 1930 to June 1932                                    27                                           -80%

 

September 1932 to February 1933                      6                                           -30%

 

February 1934 to July 1934                                6                                           -21%

 

March 1937 to March 1938                                13                                           -50%

 

January 1939 to April 1939                                 4                                           -16%

 

October 1939 to May 1940                                 8                                           -26%

 

November 1940 to April 1941                              6                                           -13%

 

September 1941 to April 1942                            8                                           -22%

 

June 1946 to April 1947                                    11                                           -21%

 

November 1948 to June 1949                              8                                           -10%

 

August 1957 to December 1957                          5                                           -15%

 

January 1962 to June 1962                                 6                                           -22%

 

February 1966 to September 1966                      8                                           -16%

 

December 1968 to June 1970                            19                                           -29%

 

January 1973 to September 1974                       21                                           -43%

 

January 1977 to February 1978                          14                                           -14%

 

December 1980 to July 1982                             20                                           -17%

 

September 1987 to November 1987                     3                                           -30%

 

June 1990 to October 1990                                5                                           -15%

 

May 1998 to August 1998                                  4                                           -13%

 

September 2000 to September 2002                  25                                           -45%

 

 

UP MARKET CYCLES

 

                   Period                             Number of Months                 S&P 500 Total Return

 

January 1926 to August 1929                            44                                          193%

 

December 1929 to March 1930                           4                                            21%

 

July 1932 to August 1932                                   2                                            92%

 

March 1933 to January 1934                             11                                          105%

 

August 1934 to February 1937                           31                                          135%

 

April 1938 to December 1938                             9                                            61%

 

May 1939 to September 1939                             5                                            22%

 

June 1940 to October 1940                                5                                            22%

 

May 1941 to August 1941                                  4                                            14%

 

May 1942 to May 1946                                     49                                          210%

 

May 1947 to October 1948                                18                                           23%

 

July 1949 to July 1957                                      97                                          429%

 

January 1958 to December 1961                        48                                          105%

 

July 1962 to January 1966                                 43                                           90%

 

October 1966 to November 1968                        26                                           52%

 

July 1970 to December 1972                             30                                           76%

 

October 1974 to December 1976                       27                                           86%

 

March 1978 to November 1980                          33                                           86%

 

August 1982 to August 1987                             61                                          282%

 

December 1987 to May 1990                             30                                           71%

 

November 1990 to April 1998                             90                                          345%

 

September 1998 to August 2000                        24                                           63%



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