As I write this, the headline on CNBC is “S&P posts longest losing streak in nearly 36 years“. This is true, and here is the chart of the last 9 days:
Down 3% in 9 days. Bad, but not terrible. How so? For some perspective, let’s take a look at some other time frames just within the last 6 years.
Here is a 13 day period in 2011 that would be a longer streak than the 9 days streak we are in now if not for the tiny blip up right in the middle. Still, 16% down in a couple of weeks wasn’t a fun time, but didn’t make the “worst in 36 years” news.
Seven months later in early 2012 we saw a 17 day drop, again with one slight up day, wherein the market fell almost 8%.
Almost exactly 2 years ago in 2014 we had 5 bad days, averaging almost 1% drop each day. Shorter than now, but definitely worse.
Then, just last year, there were 8 days (during the hottest part of the year, no less) where the market fell by 11%. Since 8 matched the ‘record’, the news didn’t get their headline. But this was nearly 4 times worse in loss of value!
My point is that the news sensationalizes something that shouldn’t be sensationalized. Who cares if it’s been 36 years since we’ve had this long without an up day? In truth, we really haven’t seen much of a slide at all, going into the most unpredictable presidential election in a long time. Moreover, we expect to see a 10% drop in the market every roughly 13 months. Much like a forest fire, a correction is healthy. And, investing should be viewed in the long term, not over the course of days, weeks, or even months. And, for that, I present to you the last 7 years, where the market has returned an average annual return of over 10%. Note that all of the above charts are inside of this chart.
So, don’t worry, be happy, and go out and vote!