Weekly Market Update - July 17

By Ryan Gilmer, CFA, CMT Chief Investment Officer

July 17, 2020

In the market this week, stock returns were roughly flat, although the S&P 500 did rally back to its most-recent high at 3,232, which it first achieved on June 8th. Since that time period six weeks ago, we have seen two brief market corrections, quickly followed by further advances.

This week’s chart is courtesy of Charles Schwab’s Quarterly Chartbook. It shows that investor returns can vary significantly just by missing a few of the best returning days.

Here are some considerations regarding the chart’s information:Here are some considerations regarding the chart’s information:

  • The New York Stock Exchange averages 253 trading days per year. Over 20 years, that multiplies to 5,060 days. On a percentage basis, 40 days is roughly 0.79% of a 20-year timeframe, but missing these accounted for a 10% annualized difference in performance.
  • Big up days in the market are not random – they tend to happen in conjunction with big down days. In other words, when market volatility is extreme, during periods of economic stress and panic, we tend to see big swings in both directions. Consider these volatile days in the S&P 500 from March 2020:

While the extreme volatility we’ve seen this year is rare, when it does happen, it is typical for markets to move strongly in both directions. Why do we encourage you to stay invested despite the uncertainty? It gives you the best chance of realizing attractive returns. If we do we see volatility come back in the second half of the year, remember that the markets have shown us how quickly they can rebound.

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