Market Volatility Is Perfectly Normal

Last Edited by: LPL Research

Last Updated: October 07, 2021

Street View

There is no reason to panic with all the big news about the bull market—October is known for volatility. When you look back at the past 20 years, October has actually been one of the top performing months—historically, the best fourth month. No other month sees 1%, 2%, or 3% moves than October—which we think is perfectly normal in the overall structure of a major bull market.

Since 1980, the average S&P 500 Index year sees a 14% peak to trough correction, as shown in the chart. Half of the years since 1980 have seen at least a 10% correction. Market corrections are normal, but we believe things may go a little better than expected in the fourth quarter. Historically, when the S&P 500 is up at least 12.5% coming into the fourth quarter—for nine of the last ten years—stocks were up during the fourth quarter when there was a big gain coming into it. 

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IMPORTANT DISCLOSURES

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth in the podcast may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. All indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

All index data is from FactSet.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This Research material was prepared by LPL Financial, LLC. 

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