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 Period||Max 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.