Hello from Sycamore,

If you have been watching the news lately, you have likely seen that the markets have been volatile. What should you do you ask? We believe it is best to stay the course. These recent, large single day declines may seem a bit spooky, but when we look at the big picture, these are to be expected with an index that has increased in value over time. The Dow Jones Industrial Average (DJIA) has been around for over 122 years and in January 1975 the DJIA was valued a little over 600 points, now fast forward to 2018 we have seen the DJIA climb to well over 26,000 points.

If we learned one thing from some of our most volatile times: the great depression of 1929, black Monday 1987, Friday the 13th, 1989, the dot com crash of 2000, September 11, 2001, or the recession of 2008 – it is that markets are resilient. Historically September proves to be the worst performing month of the year and then October follows it and proves to be the most volatile month in the market. For these reasons we aren’t surprised by the volatility we are currently seeing. Looking back on the market we have also noticed you can’t avoid volatility, but you can persist through it.

We do however, understand seeing large single day declines may feel alarming, but if we look at the 10 largest single day point declines vs the 10 largest single day percentage declines it can point out that although the single day numbers are larger, the percentage declines are smaller. We may not like seeing the large point declines, but even a decline of over 1000 points is under a 5% change, making this much lower than the drops we have seen during even the most recent recession (2008).

Largest Single Day Point Declines Largest Single Day Declines by %
Rank Date Close Net Change % Change Rank Date Close Net Change %Change
1 2/5/18 24,345.75 -1,175.21 -4.6 1 10/19/1987 1738.74 -508 -22.61
2 2/8/2018 23,860.46 -1,032.89 -4.15 2 10/28/1929 260.64 -38.33 -12.82
3 10/10/2018 25,598.74 -831.83 -3.15 3 10/29/1929 230.07 -30.57 -11.73
4 9/29/2008 10,365.45 -777.68 -6.98 4 11/6/1929 232.13 -25.55 -9.92
5 10/15/2008 8,577.91 -733.08 -7.87 5 12/18/1899 58.27 -5.57 -8.72
6 3/22/2018 23,957.89 -724.42 -2.93 6 8/12/1932 63.11 -5.79 -8.4
7 9/17/2001 8,920.70 -684.81 -7.13 7 3/14/1907 76.23 -6.89 -8.29
8 12/1/2008 8,149.09 -679.95 -7.7 8 10/26/1987 1793.93 -156.83 -8.04
9 10/9/2008 8,579.19 -678.92 -7.33 9 10/15/2008 8577.91 -733.08 -7.87
10 2/2/2018 25,520.96 -665.75 -2.54 10 7/21/1933 88.71 -7.55 -7.84

Source Wikipedia

So back to the original question – is this normal? We feel it is.

Thanks for your business and trust!

Allison Rumschik
Sycamore Financial Group

*Past performance does not assure future results. Investors cannot invest directly in the stock market indexes such as the S&P 500. Investment return and principal value of an investment will fluctuate. Investor value, when sold may be worth more or less than their original cost.