Here’s What Usually Happens to Stocks in Years Like 2016
(Bloomberg) —Despite the huge comeback in the S&P 500, investors remain skeptical of the bull rally. If history is any guide, they shouldn’t be so worried.
Bespoke Investment Group took a look at previous years that closely resemble the big drop, and even bigger comeback, the S&P 500 has experienced since January, and it’s good news for the bulls. “In terms of rest of year returns for the years highlighted [in the table below], the S&P 500’s average performance has been +3.8 percent with positive returns 80 percent of the time,” the report stated. “This is pretty much right in line with the overall average for all years since 1930.” In fact, the year with the least resemblance to 2016 was the only one in which the S&P was down by double digits through the rest of the year.
The report isn’t, however, good news for those hoping for a big year to the up or down side. Only three of the 10 years the firm looked at had double-digit moves by yearend. “In terms of extremes between now and year end, the S&P 500’s median maximum gain and loss are both equal at 7.9 percent, and in both cases this is actually less extreme than the median maximum gain and loss for all years since 1930,” Bespoke said.
This echoes the sentiment of a number of Wall Street firms expecting the S&P 500 to end the year about where it is Tuesday. Goldman Sachs Group Inc. sent out a note late last month telling investors where to invest in a flat market, and the average Wall Street target for the S&P 500 at yearend is 2,158, just 4.5 percent higher than where it stands today.
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