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Quote of the Day
“In investing, what is comfortable is rarely profitable.”
– Robert Arnott
This day in history represents one of the more recent “uncomfortable” times in the stock market. January 2016 started off as the worst beginning of the year performance in stock market history. One of the most dramatic selloffs to start the year was on this day. For a look at this day in 2016, read more below:
January 20th – This Day in Stock Market History
January 20th, 2016 – The Dow Jones Industrial Average falls as much as 565 points on the day, U.S. stock markets have their worst start to a year in history. The start of 2016 saw the first real glimpse of volatility in years. The S&P 500 finished the month down 10.5%, the Russel 2000 was 30% of its highs of just a few months prior, and emerging markets fell nearly 15%. On this day in 2016, the Dow would trade down as many as 565 points, before rallying to close down only 249 points with the Dow at 15,766.74. On this day the Dow was down more than 1,600 points on the year.
As always, headlines were quick to help spread fear:
and another:
Of course, this panic would lead to all sorts of irrational behavior from investors of all sizes. My personal favorite, RBC warning clients to “sell everything”!
However, stocks would finish 2016 very strong.
The Russell 2000 would finish the year up more than 20%, up nearly 35% from the lows of the year.
The S&P 500 would finish 2016 up 10.8%, up 20% from the lows on the year.
Best January 20th in Dow Jones Industrial Average History
1932 – Up 3.05%, 2.47 points.
Worst January 20th in Dow Jones Industrial Average History
1913 – Down 4.90%, 3.07 points.
Read of the Day
I believe studying wall street history is a great way to help prevent yourself from over-reacting during selloffs like we saw in early 2016. It had been since the “Brexit vote” that stocks had any bit of a correction, and it seemed we were overdue.
Just how often do stock market corrections occur historically? The Capital Group has a nice chart in their article here: What Past Stock Market Declines Can Teach Us
Keep these numbers in mind, and when the next correction inevitably rolls around, you will be prepared.
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