• Home
  • About
  • Services
  • Contact
  • Media

Should You Care About Intra-year Returns?

Posted March 10, 2016 by Denis Smirnov

2016 started with the worst first week for the market ever.  Things continued to get worse and culminated (so far!) on February 11 with S&P 500 11.4% below where it started the year. Everybody was freaking out and calling the end of the world (China! Oil! China! Ouchie!).  Things have improved quite a bit since then, but investors are still very skittish.  I wanted to see if history can tell us where we go from here.

Let’s take a look at the busy chart below.  These are intra-year returns from 12/31 close of the prior year (other analyses may focus on the range from high to low within a year). Red bars are returns from the start to the lowest point of the year, green bars are to the highest, blue dots are the closing returns for that year.  Then we have the dotted lines which represent the average for the metric with corresponding color (green for average high, blue for average close and red for average low).

Exhibit 1 – S&P 500 YTD Returns At Highs, Lows & Year-end – 1951 to 2016 (March 8)

46-1

Some interesting observations from the analysis of these data:

  • The average YTD low was 9.4%.
  • This year’s 11.4% decline from 12/31/15 was in the 30th percentile, meaning that there were 20 years with deeper lows.
  • Of those worse years average full year return was -7.8%, quite a bit worse than +8.5% for all years. There were only a few years in which there was still a positive full-year return after a YTD decline of over -11.4%, such as 2009 – coming off a real bad year and continuing to sell off before a big bounce.
  • Average YTD high was 15.2% and average finish was 8.5%.
  • Interestingly the high for 2016 is actually negative -0.3%, so we sold off on day one and never got in the green (although there is a lot of the year left).
  • As you can see from the colored dotted lines, the index tends to close towards the higher end of its annual range (73rd percentile).
  • The low (so far) occurred pretty early this year (42 days), on average it happens after 118 days (April 22).  Average high occurred on August 24 (237 days). I was going to put in a chart on the high/low day counts but it’s very noisy and doesn’t seem to add any predictive significance.

Lots of data there, but not sure if it really tells us much of anything. The 2016 pullback magnitude is towards the higher end and it may augur a less than stellar year.  However, the data is far from conclusive and personally I would put it in the “mildly interesting but not terribly useful” file.

Share this:

  • Facebook
  • LinkedIn
  • Twitter
  • Pocket
  • Email

Sign up to the newsletter

Categories

  • Bear Markets
  • Bonds
  • Economy
  • Education
  • Financial Planning
  • Indexing
  • Investing
  • IPO
  • Retirement
  • Taxes
  • Uncategorized
  • Valuation

Archives

  • January 2023
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • May 2022
  • April 2022
  • February 2022
  • January 2022
  • October 2021
  • September 2021
  • July 2021
  • February 2021
  • January 2021
  • November 2020
  • October 2020
  • September 2020
  • July 2020
  • June 2020
  • May 2020
  • March 2020
  • February 2020
  • January 2020
  • November 2019
  • October 2019
  • September 2019
  • July 2019
  • May 2019
  • February 2019
  • January 2019
  • December 2018
  • October 2018
  • September 2018
  • July 2018
  • June 2018
  • May 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • October 2013
About
  • Background
  • Who We Are
  • The Gordian Knot
Services
  • Services
  • Planning Process
  • Investment Philosophy
Contact
  • Contact Details
  • Inquiry Form
  • Map
Media
  • Articles
  • Blog
  • Reviews
Dave
Denis
 
 
 
 

Gordian Advisors Financial Planner

Office: 2200 E. River Rd., Suite 109, Tucson, AZ 85718

Phone: 520-615-2779

Email: info@gordianadvisors.com

Download Form Form CRS Client Relationship Summary

Download Form ADV Disclosure Brochure

Gordian Advisors may only transact business or render personalized investment advice in those states where we are registered, or have filed notice, or are otherwise excluded or exempted from registration requirements. Material discussed is meant for general illustration and/or informational purposes only, and is not to be construed as investment advice. Nothing on this web-site should be interpreted to state or imply that past results are an indication of future performance. Although this information has been gathered from sources believed to be reliable, please note that individual situations may vary. Therefore, any information should be relied upon only when coordinated with individual professional advice.