Sell-Off Makes History

If the Stock market has had your head spinning and your stomach churning, there is a good reason.

The Stock market sell-off of 2020 – through March 23 – set a record for its speed and magnitude. For the 21-trading days ending March 23, the S&P 500 Index fell by 32.9%. The full magnitude of the fall – so far – was 33.9% in 23-days. Outside the Great Depression, that was the most vicious sell-off of the past 90-years. (Our data goes back to 1928.)

There have been bigger sell-offs, but only in the depression have we seen so much ground covered (lost) in 21-days.

Rapid Sell-Offs of the Past 90-Years

Time PeriodMax 21-Day Loss (1-Month)
October – November 1929 -42.6%
September – October 1931 -33.9%
March – April 1932 -30.5%
September – October 1987 -30.0%
September – October 2008 -30.0%
February – March 2020 -32.9%

If you examine the most extreme and rapid sell-offs in Stock market history, they have been associated with significant investment opportunities. The possible exceptions occurred in the early phases of the Great Depression (1929 – 1931). The early Fed and the Fed of today are not comparable; today the Fed has sophisticated tools and techniques and an enormous and – potentially – unlimited balance sheet with which to conduct operations. These capabilities simply did not exist 90-years ago.

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