Examining Intra-Year Pullbacks: Ritholtz Chart
Examining Intra-Year Pullbacks: Ritholtz ChartBy
Source: JPMorgan Guide to the Markets
For today's chart, I wanted to look at something unusual: the intra-year pullbacks of the past few decades.
As this chart (via JPMorgan Chase & Co.) shows, there is an average market drawdown of 14.7 percent. That period includes a few whopper years. Even if we were to back out the outliers -- remove the five biggest drawdowns (34 percent, 30 percent, 34 percent, 49 percent and 28 percent -- average drawdown of 35 percent within the year), we still see an 11.5 percent average intra-year drop.
Astonishingly, year-to-date the biggest drawdown we have experienced in the S&P 500 has been 7.52 percent during the initial taper concerns.
Regardless of which drawdown stat you prefer, JPMorgan's chart is a good reminder: Despite intra-year pullbacks, over the past 33 years, returns have been positive in 25 of the 33 periods in question.
What's next year likely to look like?
To contact the author on this story:
Barry L Ritholtz at firstname.lastname@example.org