What does a -1.62% decline in the S&P on September 25th tell you?

September 26, 2014  | By Kevin Smith

It seems that whenever the daily price change of the stock market exceeds plus or minus 1%, the news headlines provide us with an indication that we should panic or rejoice. As you can see in the chart of daily S&P 500 price changes, we routinely observe activity between +2% and -2%.

Since the bottom of the stock market on March 9th, 2009 during our most recent recession, there have been 92 days in which the S&P 500 declined by more than -1.5%, which is almost 7 out of 100 trading days during our recovery. The odds of today’s price decline being an indicator of the next major downturn are about as good as any of the preceding 92, which would have all been wrong.

What should a -1.62% decline in the S&P on September 25th tell you? Not much. I encourage you not to support the bad habits of financial copywriters by clicking on articles related to modest daily price changes.


Source: Yahoo! Finance

Posted in: Investing, Stocks
Kevin X. Smith, CFA
512.467.2003   |  [email protected]

Kevin is responsible for advising clients for whom he is the lead financial advisor. He also manages the operations and development of the firm, and oversees all of the investments of Austin Wealth Management clients. Kevin is on a mission…Read More

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