19 Mar Market Volatility: A Perspective On Recent Activity
The widely followed S&P 500 index rose 0.47% on March 19th. On the surface, that would appear a fairly ordinary day for the stock market index. What’s remarkable about the result in that it ended a streak of eight consecutive trading days where the index moved more than 4% in either direction. The now-ended streak of eight days is the longest on record, going back to 1928.
Thursday’s performance also ended a streak of 5 days with gains or losses exceeding 5%, nearing the 6-day streak that occurred in 1929, another historically difficult period for stocks.
This also marks an inauspicious start to the decade in terms of volatility. Despite being less than three months old, the 2020s have already seen more days with 5% gains or losses than the 1950s, 1960s, 1970s, 1990s or 2010s.
It’s unlikely that the end of streak signals any type of change from the recent surge in volatility that global markets have experienced. For one thing, although the result for the day was somewhat muted, the intraday activity continued to see large swings. Early in the day the index was down roughly 3.25% and was later up almost 2.9%. Developments on the spread and impact of the coronavirus are likely to continue to roil markets in the near-term.
Given all of the recent volatility – and the likelihood or more to come – what should investors be doing? The simple answer may be “not much”. Even in the best of times, trying to time the market is a precarious exercise and letting fear drive you out of the market may lead to significant lost opportunities.
For those with a long-term plan, despite being unsettling, the recent events may have little impact. For those without a long-term plan, this is my shameless plug to connect with an adviser and create one.