Apparently hearts are a flutter in the investment world because it has supposedly been sometime since the US market had any form of meaningful decline. This has even prompted many to go around saying that the end of the world is inevitable and as usual this sort of thing piqued my curiosity. So, I thought I would look at the length of time between drawdowns of various sizes on the S&P 500 and the results are shown below.
The obvious question is whether the current move is unusual in duration and the answer is yes and no. The average length between 5% gyrations is about 90 odd days depending upon when you begin your count but there have been other rallies of similar duration in the 1950’s , 1960’s and the 1990’s. So it is long but but not out of character. The unfortunate thing about such data is that instead of being viewed simply as an intellectual curiosity a narrative is crafted around it that offers all sorts of portents of doom and gloom. Such people going on making the same prediction over and over until they are eventually proved correct by the natural dynamics of the market as all booms end in busts.But that does not mean that they are going to go bust the moment you happen to notice something.