Someone was asking us, so below we provide an updated list of the worst starts for the S&P 500 (through 1/25) since 1929, which is as far back as we have data. As shown, 2008 is currently the worst start ever for the S&P 500. On a brighter note though, in each year where the index was down more than 5% through 1/25, the performance from 1/25 through the end of the year was positive every single time with an average gain of 7.26%.
This year's declines in equities have also increased fears that if we are not already in a recession, we will be in one shortly. Looking back at the S&P's prior bad starts (declines of more than 5% as of 1/25), we calculated how many months it took before the start of the next recession. As shown, in three of the six periods, a recession began within the next nine months. However, in the other three years, it took at least 24 months before a recession began.
Subscribe to Bespoke Premium today.
Isn't that a rather arbitrary way to slice up reality? The world didn't start on January 1st.
Wouldn't a more appropriate question be: If the S&P drops 9.38% in 25 days then how long till the next recession?
Posted by: bitteroldcoot | January 29, 2008 at 01:09 PM