We are currently 9.2 years into the bull market and the S&P 500 has returned 386%. Going back to 1936, the average bull market has lasted 9.4 years and returned 633%. These historical observations suggest that our current bull market is neither long nor exceptional in its magnitude.
The divergence of beta and risk
Over the last year, correlations between beta and risk have weakened compared to historical levels. While the two measures of risk are usually highly correlated, beta and risk don’t always mean the same thing.
A case for active investing in low volatility equity
Low volatility equity strategies have become an increasingly popular solution in the investor toolbox. This is largely the result of an increasing awareness of the low volatility anomaly and a growing use of lower volatility seeking smart-beta strategies.
Recovery takes time
Over the past nine years, the S&P 500 has recovered from 10% drawdowns in 54 days on average. However, as of 4/30/2018, it had still not recovered from the 10% drawdown seen in February. That’s 81 days!
Stock market volatility: What is normal?
Heightened volatility served as one of the major talking points for the first quarter of 2018. While February’s 10% drawdown may seem large given the calm of 2017, taken in aggregate, this year’s volatility is not out of the ordinary.
The S&P 500 Index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic U.S. economy through changes in the aggregate market value of 500 stocks representing all major industries. Investments cannot be made in an index.