With the S&P 500 up double digits year to date many investors are increasingly nervous about the next sell off. We thought we would look at recent history and examine the magnitude of intra-year declines. The chart below (courtesy of FactSet, S&P, and JP Morgan) shows the intra-year declines and calendar year returns beginning in 1980 - thru June of this year. Year to date thru June the intra-year decline for 2017 is just 3%. The average intra-year decline for the period is just over 14%. In the 37 calendar years the intra-year decline was less than 10% about 43% of the time. About 41% of the time the decline was above 10% but below 20% (technically a “correction” is a market that goes down more than 10%). In 6 years (16% of the time), the intra-year decline was greater than 20% (aka a “bear” market). While the markets have grinded higher with little interruption so far this year, investment managers forget we had corrections (albeit shallow) both last year and in 2015.
While we don’t know when the next market decline nor its magnitude, the chart provides historical context. Finally, note that in the 37 full years depicted below 28 of them (75%) have posted positive calendar year returns.
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Chris McGee heads Caldwell’s investment committee, which draws on a team of experienced in-house professionals and carefully chosen outside analysts to make decisions for client portfolios.
A Chartered Financial Analyst (CFA) and Chartered Alternative Investment Analyst (CAIA), McGee had previously been senior investment adviser and senior vice president at PNC Wealth Management in Sarasota for nearly a decade. Prior to that he was portfolio manager for five years with U.S. Trust (formerly Bank of America) in Sarasota. Before relocating here, he had served as vice president, capital management, for Wachovia Bank in Winston-Salem, North Carolina.
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About Caldwell Trust Company
Caldwell Trust Company is an independent trust company with offices in Venice and Sarasota, Florida. Established in 1993, the firm currently has nearly $1 billion dollars in assets under management for clients throughout the United States. The company offers a full range of fiduciary services to individuals including services as trustee, custodian, investment adviser, financial manager and personal representative. Additionally, Caldwell manages 401(k) and 403(b) qualified retirement plans for employers.
