The press tried to find reasons to attach to the drop, but they forgot a basic fundamental fact of finance. With higher returns comes higher volatility. It’s that simple.
If we define the end of the bull market to be one which experiences a 20% correction, then the current bull market is the 2nd longest in history! As shown below, the longest bull market ended in March 2000.
| Start | End | Days | Start Price | End Price | % Chg | % Annual |
| 12-4-1987 | 3-24-2000 | 4494 | 223.92 | 1527.46 | 582% | 17% |
| 3-9-2009 | 2-5-2018 | 3257 | 676.53 | 2648.94 | 292% | 17% |
| 6-13-1949 | 8-2-1956 | 2607 | 13.55 | 49.74 | 267% | 20% |
| 10-3-1974 | 11-28-1980 | 2248 | 62.28 | 140.52 | 126% | 14% |
| 7-23-2002 | 10-9-2007 | 1904 | 797.7 | 1565.15 | 96% | 14% |
| 8-12-1982 | 8-25-1987 | 1839 | 102.42 | 336.77 | 229% | 27% |
| 10-22-1957 | 12-12-1961 | 1512 | 38.98 | 72.64 | 86% | 16% |
| 4-28-1942 | 5-29-1946 | 1492 | 7.47 | 19.25 | 158% | 26% |
| 6-26-1962 | 2-9-1966 | 1324 | 52.32 | 94.06 | 80% | 18% |
| 5-26-1970 | 1-11-1973 | 961 | 69.29 | 120.24 | 74% | 23% |
The latest correction so far didn’t even drop 10% !!! If we look at the table below, we see all the market rallies of 10%+ without a 10% correction. The current rally ranks 9th in history!
| Start | End | Days | Start Price | End Price | % Chg | % Annual |
| 10-11-1990 | 10-7-1997 | 2553 | 295.46 | 983.12 | 232.74% | 19% |
| 3-11-2003 | 10-9-2007 | 1673 | 800.73 | 1565.15 | 95.47% | 16% |
| 10-3-2011 | 5-21-2015 | 1326 | 1099.23 | 2130.82 | 93.85% | 20% |
| 10-23-1962 | 2-9-1966 | 1205 | 53.49 | 94.06 | 75.85% | 19% |
| 7-24-1984 | 8-25-1987 | 1127 | 147.82 | 336.77 | 127.82% | 31% |
| 7-17-1950 | 1-5-1953 | 903 | 16.68 | 26.66 | 59.83% | 21% |
| 11-29-1943 | 2-5-1946 | 799 | 10.99 | 18.7 | 70.15% | 27% |
| 9-14-1953 | 9-23-1955 | 739 | 22.71 | 45.63 | 100.92% | 41% |
| 2-11-2016 | 2-7-2018 | 727 | 1829.08 | 2648.94 | 44.82% | 20% |
| 12-4-1987 | 10-9-1989 | 675 | 223.92 | 359.8 | 60.68% | 29% |
The market did correct by more than 5% and so the below static came to an end on January 26th. As you see from the table it was the 2nd longest 5%+ rally in history without a 5% correction.
| Start | End | Days | Start Price | End Price | % Chg | % Annual |
| 12-18-1957 | 8-3-1959 | 593 | 39.38 | 60.71 | 54.16% | 31% |
| 6-27-2016 | 1-26-2018 | 578 | 2000.54 | 2872.87 | 43.60% | 26% |
| 11-22-1963 | 5-13-1965 | 538 | 69.61 | 90.27 | 29.68% | 19% |
| 12-8-1994 | 5-24-1996 | 533 | 445.45 | 678.51 | 52.32% | 33% |
| 10-9-1992 | 2-2-1994 | 481 | 402.66 | 482 | 19.70% | 15% |
| 9-14-1953 | 1-3-1955 | 476 | 22.71 | 36.75 | 61.82% | 45% |
| 10-25-1960 | 12-12-1961 | 413 | 52.3 | 72.64 | 38.89% | 34% |
| 10-23-1962 | 10-28-1963 | 370 | 53.49 | 74.48 | 39.24% | 39% |
| 6-13-1949 | 6-12-1950 | 364 | 13.55 | 19.4 | 43.17% | 43% |
| 4-28-1942 | 4-6-1943 | 343 | 7.47 | 11.76 | 57.43% | 62% |
So I hope the above tables help provide some perspective. Essentially, the market activity over the last year has not been normal. Volatility is normal in the market and provides opportunities. It’s important to remember that markets do not go instantly from Bull to Bear as some of the media would suggest.
And if you want to play this game you have to be able to endure both volatility and loss. That is the norm. Not the constant up activity we have seen in the last year.
Good luck!
