October was quite a month from an S&P 500 standpoint. The index grew 10.9%, its largest growth month since 1991. This growth spurt followed, as you may recall, 5 consecutive months of decline.
We’re certainly seeing big daily, weekly and monthly swings in stock market indices…. turbulent times indeed. But, with stock markets, shouldn’t we expect a degree of turbulence? Since 1980, for example, the average intra-year (that is, during each calendar year) S&P 500 decline exceeded 14%. Restated, the average high-to-low decline during those calendar years exceeded 14%.
Calendar year returns since 1980 were positive 24 of the 31 years, despite those intra-year declines. And, the average annual return for the S&P 500 for the 1980 through 2010 period was 11.4%. So, a level of stock market turbulence seems to have always been with us, and the long-term stock market return was attractive despite it.
It is our belief that a properly diversified investment portfolio remains an effective strategy for dealing with rocky and uncertain markets in the future. Your advisor is best suited to help you navigate through these turbulent times.