Excerpt from Bloomberg quoting DataTrek Research:
“Cutting through all the noise, the thing to know is that such sell-offs, while painful, are normal and that it pays to hang on. After the S&P 500 plunged 4.10 percent on Feb. 5, DataTrek Research crunched the numbers and found that declines of 4 percent or more on a single day have happened 41 times in 59 years. That’s an average of about 0.7 times a year. So while Wednesday’s drop of 3.29 percent and Thursday’s 2.06 percent drawdown each fell a bit short of the bogey, taken together they are enough to say it has happened twice this year — and we can take a look at what usually follows. According to DataTrek, although the S&P 500 is generally flat in the month following a big plunge, over the next year it has been up an average 20.1 percent. The point here is that the stock market is extremely resilient. Yes, there currently seems to be an abundance of headwinds facing equities, from trade wars and rising interest rates to $1 trillion budget deficits, but there are always plenty of obstacles facing equities.”
Read the whole article here on Bloomberg!