Trying to make sense of it all?
Clearly the events of the last several days are unsettling. In speaking with many people over the last few days the consensus opinion is that it will take a long time to recover from this. That could be the case but history would show that would be the exception not the rule. Thanks to Steve Schwab (no relation to Chuck) at Technical Niche Trading who passed along this data from Arrow Funds.
|
Ending Date |
1 Yr Decline |
1 Yr Later |
3 yrs* |
5 yrs* |
10 yrs* |
|
June 1932 |
-67.6% |
+131.3% |
+36.1% |
+36.1% |
+12.3% |
|
March 1938 |
-49.7% |
+17.3% |
+1.0% |
+5.6% |
+7.9% |
|
May 1931 |
-43.9 |
-58.5% |
-5.6% |
+4.0% |
+.8% |
|
Sept. 1974 |
-39% |
-18.0% |
+15.2% |
+13.9% |
+14.2% |
|
Sept. 2001 |
-26.6% |
-18.0% |
+.8% |
+4.6% |
N/A |
|
March 2003 |
-23.4% |
+38.5% |
+17.1% |
+11.6% |
N/A |
|
May 1970 |
-23.4% |
+32.2 % |
+13.0% |
+5.0% |
+7.1% |
|
Sept. 2008 |
-22.0% |
? |
? |
? |
? |
|
May 1947 |
-20.9% |
+12.4% |
+14.6% |
+17.4% |
+18.7% |
|
April 1941 |
-18.2% |
-13.4% |
+13.5% |
+19.2% |
+14.6% |
|
August 1988 |
-17.8% |
+31.9% |
+16.6% |
+14.2% |
+18.5% |
|
March 1935 |
-17.2% |
+73.9% |
+14.6% |
+12.1% |
+11.0% |
|
October 1962 |
-14.9% |
+31.7% |
+20.7% |
+15.1% |
+10.5% |
|
July 1982 |
-13.3% |
+61.2% |
+26.3% |
+27.9% |
+18.5% |
|
Average |
-28.5% |
+28.2% |
+14.1% |
+14.4% |
+12.2% |
* Annualized Returns
There are many examples of double digit returns after the bottom has been reached. The multiple year columns are annualized numbers and show for the most part exceptional returns.
Emotional blow-offs in the markets result in exceptional values in great companies. Companies like Microsoft, Apple Computer, Baxter International, CVS, Comcast etc., are not going away. Every bear market is unique and this one is no different. In a previous post we also explored some of these past events. The common theme near the bottom is fear that it can only get worse because the news is so negative. Of course, eventually things do change and often very quickly. We are here for you if you do want to discuss in more depth. Another interesting viewpoint from a Morningstar analyst follows.