Was 2017 a unique year for the stock market?

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Dead Man Walking
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Was 2017 a unique year for the stock market?

Post by Dead Man Walking » Tue Jan 16, 2018 7:29 pm

On the local news, a finance professor stated that 2017 was the first year that the stock market did not experience a 10% correction. Is that correct?

DMW

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Peculiar_Investor
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Re: Was 2017 a unique year for the stock market?

Post by Peculiar_Investor » Tue Jan 16, 2018 7:38 pm

Which stock market? There are Bogleheads here from many different countries.
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flyingaway
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Re: Was 2017 a unique year for the stock market?

Post by flyingaway » Tue Jan 16, 2018 7:45 pm

Every year is different and unique.

lack_ey
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Re: Was 2017 a unique year for the stock market?

Post by lack_ey » Tue Jan 16, 2018 8:07 pm

No, 10% intrayear declines are common but don't happen every year.

IIRC maybe there was some kind of statistic such as there being about X 10%+ drawdowns in the last X years for the US market, or some other figure where the two are similar, coming around to about 1 on average a year. But that's because some years have multiple, not that you actually see one a year. Just look back a bit and 2014 and 2013 never had declines larger than 10%.


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Dead Man Walking
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Re: Was 2017 a unique year for the stock market?

Post by Dead Man Walking » Tue Jan 16, 2018 11:24 pm

Peculiar_Investor wrote:
Tue Jan 16, 2018 7:38 pm
Which stock market? There are Bogleheads here from many different countries.
How about Canada? Israel? Great Britain? Vietnam?

Dead Man Walking
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Re: Was 2017 a unique year for the stock market?

Post by Dead Man Walking » Tue Jan 16, 2018 11:28 pm

lack_ey wrote:
Tue Jan 16, 2018 8:07 pm
No, 10% intrayear declines are common but don't happen every year.

IIRC maybe there was some kind of statistic such as there being about X 10%+ drawdowns in the last X years for the US market, or some other figure where the two are similar, coming around to about 1 on average a year. But that's because some years have multiple, not that you actually see one a year. Just look back a bit and 2014 and 2013 never had declines larger than 10%.


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https://am.jpmorgan.com/us/en/asset-man ... he-markets

red dots/numbers
Thanks for the data. I thought that he was wrong. It was not different this time.

DMW

venkman
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Re: Was 2017 a unique year for the stock market?

Post by venkman » Tue Jan 16, 2018 11:28 pm

I do remember reading that 2017 was the first year in which market returns were positive for every single calendar month.

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CyclingDuo
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Re: Was 2017 a unique year for the stock market?

Post by CyclingDuo » Wed Jan 17, 2018 5:41 am

Dead Man Walking wrote:
Tue Jan 16, 2018 7:29 pm
On the local news, a finance professor stated that 2017 was the first year that the stock market did not experience a 10% correction. Is that correct?
There was plenty of normal going on within the stock market in 2017. In terms of corrections, these individual stocks are examples...

GE dropped from $31 to $17 = -45.1%
Target dropped from $78 to $50 = - 35.8%
Qualcomm dropped from $66 to $49 = -25.7%
AT & T dropped from $42 to 33 = -21.4%
Altria dropped from $77 to $61 = -20.7%
Verizon dropped from $53 to $43 = -18.8%
Costco went from $182 to $151 = -17%
Wells Fargo dropped from $59 to $49 = -16.9%
Amgen dropped from $182 to $153 = -15.9%
Nvidia dropped from $216 to $186 = -13.8%
Facebook dropped from $132 to $115 = -12.8%
Chevron dropped from $118 to $103 = -12.7%
JP Morgan dropped from $93 to $82 = -11.8%
Exxon dropped from $87 to $76 = -11.3%
Amazon dropped from $1052 to $938 = -10.8%
Berkshire Hathaway B dropped from $177 to $161 = -9%
Home Depot dropped from $158 to $144 = -8.8%
Walmart dropped from $80 to $73 = -8.7%
Apple dropped from $164 to $150 = -8.5%
Google dropped from $1004 to $919 = -8.4%
Apple dropped from $155 to $142 = -8.3%

Many more individual stocks experienced similar, but the above illustrates what rolling corrections, sector rotation, and price action did throughout 2017 to various individual stocks even though the Indices appeared less volatile due to the money simply rotating in and out of other equities/sectors.

In addition, BH member grog posted this:

The S&P 500 returned 21% in 2017. Just to put the 2017 run-up in perspective, this also occurred in...

2013
2009
2003
1999
1998
1997
1996
1995
1991
1989
1985
1983
1982
1980

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lazydavid
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Re: Was 2017 a unique year for the stock market?

Post by lazydavid » Wed Jan 17, 2018 9:52 am

venkman wrote:
Tue Jan 16, 2018 11:28 pm
I do remember reading that 2017 was the first year in which market returns were positive for every single calendar month.
This. The last time the S&P had 11 positive months in a calendar year was 2006, and even that has only happened 3 times. The last time it had 9 months in a row was 1995. The current tally stands at 14 months, and given the strong start, it seems likely that it'll hit at least 15--of course, nothing is guaranteed.

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Index Fan
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Re: Was 2017 a unique year for the stock market?

Post by Index Fan » Wed Jan 17, 2018 10:49 am

Yeah, but it all averages out! :)
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OkieIndexer
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Re: Was 2017 a unique year for the stock market?

Post by OkieIndexer » Wed Jan 17, 2018 4:13 pm

Yes, it was a unique year. There's been a total lack of volatility in the market since Nov. 2016. We haven't had even a 3% drop in the S&P 500 since Nov. 2016, 13.5 months now. The previous record for "no 3% drop" was Jan. 1995-Jan. 1996, 12 months, which of course was followed by several strong years for the market.

On the other hand, if we use longest period without a 2% drop, we haven't had a 2% drop in the S&P 500 since last August, 4.5 months ago. We also went 4.5 months without a 2% drop from Nov. 2016-March 2017. Before this, the previous record for "no 2% drop" was the 5.5 months between 9/8/2006 - 2/27/2007, which of course was followed by a market crash the next 2 years.

So it appears that very low volatility alone isn't a useful indicator of anything major.

There have been lots of years with no 10% correction.
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Dead Man Walking
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Re: Was 2017 a unique year for the stock market?

Post by Dead Man Walking » Thu Jan 18, 2018 5:03 am

OkieIndexer wrote:
Wed Jan 17, 2018 4:13 pm
Yes, it was a unique year. There's been a total lack of volatility in the market since Nov. 2016. We haven't had even a 3% drop in the S&P 500 since Nov. 2016, 13.5 months now. The previous record for "no 3% drop" was Jan. 1995-Jan. 1996, 12 months, which of course was followed by several strong years for the market.

On the other hand, if we use longest period without a 2% drop, we haven't had a 2% drop in the S&P 500 since last August, 4.5 months ago. We also went 4.5 months without a 2% drop from Nov. 2016-March 2017. Before this, the previous record for "no 2% drop" was the 5.5 months between 9/8/2006 - 2/27/2007, which of course was followed by a market crash the next 2 years.

So it appears that very low volatility alone isn't a useful indicator of anything major.

There have been lots of years with no 10% correction.
I suspected that there were years with no 10% correction. I'm not knowledgeable enough to research the historical returns of the US stock market. I did check the returns of Vanguard Total Stock Market Fund and thought that I found that there were years without a 10% decline. There have been many posts stating that the US stock market is overdue for a major correction. Market timers may have receded to cash positions in anticipation of this probable correction. My position is that the US stock market may have a 10-15% correction this year because this would be "normal" market fluctuation. I don't plan to make any changes to my asset allocation since I expect the US stock market to fluctuate. Even with a correction, the market may have a gain for the year. Of course, I may be wrong. A major geopolitical event may throw a wrench into the works. Predicting such events is just as much of a gamble as predicting the direction of the market.

Thanks to all who provided data to prove that the US stock market has had years without a 10% correction.

DMW

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