2016 has come and gone. It started out in a very rocky fashion, with comparisons to 2008 that were too numerous to count. The following table summarizes the changes on a closing basis for the S&P 500 index during 2016. While the downside volatility nearly mimicked patterns exhibited in the past (i.e. a 10% decline from a high to a low about once per year and nearly four downside moves of 5% or greater), they all seemed uncomfortable and usually brought on a broad change in market leadership.
|
Beginning Date |
Ending Date |
Percentage Change in SPX |
|
12/31/2015 |
1/15/2016 |
-8.00% |
|
1/20/2016 |
1/29/2016 |
+3.19% |
|
2/1/2016 |
2/11/2016 |
-5.73% |
|
2/12/2016 |
4/20/2016 |
+14.94% |
|
4/21/2016 |
5/19/2016 |
-2.97% |
|
5/20/2016 |
6/8/2016 |
+3.88% |
|
6/9/2016 |
6/27/2016 |
-5.60% |
|
6/28/2016 |
8/18/2016 |
+9.10% |
|
8/19/2016 |
11/04/2016 |
-4.47% |
|
11/5/2016 |
12/31/2016 |
+7.37% |
Source: ThompsonOne
Volatility, changes in leadership and sector rotation have been and always will be part of the investment landscape. It’s how we manage and mitigate risk that is critical. To that end, in my opinion, 2016 was probably the most frustrating year I have seen in my 15 years giving investment advice. Fortunately, post-election, I believe the leadership changes that occurred during 2016 will have some stability and longevity and allow for those leaders to be held for a meaningful period of time.
Going forward, there is one thing I can promise you—we will probably run into another round of downside volatility. As an aside, I'm not sure I have met anyone who doesn't enjoy the upside volatility.
