SP500 Annual returns and Intra year declines

On Average intra-year SP500 had dropped 14.1%; May be at the beginning of a year buying a spread for 10% to 15% decline over years should make money!!!

I’ve seen this slide before and I don’t like it.

Not because it is wrong but because I believe it emphasizes the wrong data. While the average may be over 14%, it would appear that the median is less than 10% (just from eyeballing and not doing to math). Those years with 25%+ drops are pulling the average lower than the median.

This leads me to believe that an intra year decline of 10% is likely to continue lower - that there is probably some resistance around 9%. If I was going to trade based on such, I would certainly determine the median and ignore the average.

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It is upto the individual to read the data as they like it! Which we all do anyways. :slight_smile:

The main point was even on a bullish years, it is common to have 10% drawdown. Understanding this helps investor not to panic, and/ or when some of their favorite names are bit extended they can wait for the better entry points.

How you trade is up to you. For ex: I have routinely used the 10% drawdown to sell deep out of the money puts on indexes, (i.e., if SPY declines to 500, then I typically sell 400 strike) because of volatility you get better premium. Those are individual choices, based on their market view, risk tolerance, capital.

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