![]() ![]() Unless, that is, you can figure out when to buy it and when to sell it and why and get that right a few times.Īnd if you can figure out how to use SPY as a signpost for how to play growth vs value? That can be useful too. They're pretty smart.) So nobody is going to give you money for saying it. If you run a research shop you generally don't want to be saying, go buy the S&P 500 folks, because, really, the office dogs around here can work that one out. The raison d'etre of outfits like ours is usually some kind of derriere-intelligente edge on single stock names or investing methods or whatnot. Here at Cestrian we run an independent investment research shop. It's your money we're talking about here. Once you've read it you can decide whether to lob rocks at it, throw it in the trash, or think about it and use it in your own work. So, with that done, let's set a little context here first, since the whole world and their dog writes about SPY and we would like you to actually read this note, as common a topic as SPY apparently is. We also aren't going to talk about management fees on the fund because, really, who cares? They're low. If you do want to explore the underlying positions, you could start with the Seeking Alpha page covering the instrument ( here). Peering Through The Kaleidoscopeįirst up, don't worry, we aren't going to bother telling you about NYSEARCA: SPY's holdings or weightings because (1) you know that already and (2) you can read that in a thousand other places. values both its independence and transparency and does not believe that this presents a material potential conflict of interest or impacts the content of its research or publications. ![]() Companies referenced in this note or their employees or affiliates may be customers of Cestrian Capital Research, Inc. ![]() Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note’s date of publication and are subject to change without notice. Cestrian Capital Research, Inc., its employees, agents or affiliates, including the author of this note, or related persons, may have a position in any stocks, security, or financial instrument referenced in this note. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. On Opposite Day.ĭISCLAIMER: This note is intended for US recipients only and, in particular, is not directed at, nor intended to be relied upon by any UK recipients. And so, the question rolls on: Is the market's rally the foundation for new highs in the near future? Or, as suggested by history, we're in a bear market rally? Stay tuned.Investing Be Like This. But with a global recession raging, and prospects for a vaccine still uncertain, the market's headwinds remain potent. The future's uncertain, but if the strong rebound of late is an indication, we may be looking at one of the faster recoveries on record. The monster, of course, is the 1929-1932 drawdown of -84% - a hole that wasn't filled until 1954!Īs for the current correction, it continues to be a more or less middling affair through May 11. In other words, drawdowns are uglier in the pre-1950 data - one in particular. Note that this year's drawdown looks milder vs. Note too that the current monthly data for May 2020 runs through May 11.Īccording to Shiller's data, the maximum drawdown in this year's correction (just shy of -20%) ranks as the 14 th deepest peak-to-trough decline since 1871 for US stocks. This update has a much longer history, but with less granularity. daily data, which reviewed recently for the S&P 500, using a 1950 start date via Yahoo Finance numbers. The first thing to note is that calculating drawdown through a monthly lens offers a somewhat different view vs. For convenience, we'll refer to the entire history as the S&P 500. In addition, the official S&P 500 Index was launched in 1957 and so the earlier numbers are results compiled from several sources. With that in mind, let's review how the current drawdown for the S&P 500 compares over the past century and a half.įirst, a few housekeeping notes. Longer is better for analyzing the stock market, which is why Professor Robert Shiller's data set (with an 1871 starting date) is one of the great free resources on the internet for studying the history of US equities. ![]()
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