How Long"Knowledge is the antidote to fear."
 Rob Grey, Founder, Denver Money Manager LLC
 
It took 1,326 days, over 3.5 years, for the S&P 500® to experience a pullback greater than 10%. This 3rd longest streak in the last 50 years came to an end in August. (BTN Research)
 
How long until the stock market recovers from its recent pullback?
 
We can gain perspective on the current pullback in stock prices by considering post-World War II declines in the S&P 500® Index. When we do, we see that the majority of declines fall within the 5-10% range with an average recovery time of approximately one month. Declines between 10-20% occurred about every three years with an average recovery period of approximately three months.


 
John Kenneth Galbraith, Economist and Author
 
At the risk of  looking foolish by venturing predictions about the future,  I am reminded of Economist John Kenneth Galbraith's famous quote, "The function of economic forecasting is to make astrology look respectable".



yogi
 

Or as Yogi Berra, famous catcher for the New York Yankees, liked to say, "Its tough to make predictions especially about the future."
 
 



We believe that knowledge about the depth and duration of 111 pullbacks in the stock market since 1945 might provide evidence that "this too shall pass" and in time, and the stock market will fully recover. 
 
Declines in the S&P 500 Since 12/31/1945*
Decline %# of DeclinesAvg Decline  %

Avg Length

of decline

in Months

Average time to Recover in Months
5-10%75-611
10-20%25-1343
20-40%8-271114
40+%3-512257
*Copyright 2014 Ned Davis Research, Inc.
 
For a complete explanation of the table and our conclusions, click here
 
Enjoy the upcoming holiday weekend and forget about the stock market.

Grateful for your trust and confidence in our advice,

 

The Denver Money Manager Team
 
 
Joel, Aaron, Paula & Rob
 
 

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