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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