“It was the best of times, it was the worst of times.” If you’re a fan of Charles Dickens, this line might ring a bell. It was taken from “A Tale of Two Cities” which was published in 1859. Although it doesn’t compare to the current marketplace; it does focus on the French Revolution which was a time of global decline of monarchy under the dictatorship of Napoleon. I won’t dive any deeper into the historical upheaval of France, which is when this book was based.
It was the line that drew my attention based on the past 60 days that we’ve experienced in the markets. In December 2018, the S&P 500 was down 9% and the Dow was down 8.7%, which was the worst December since 1931 (Great Depression). In my opinion, it’s the worst December ever as it’s hard to compare our world to the Great Depression. On the flip side, in January 2019, the S&P 500 was up 7.9% and the Dow was up 7.2%, which was the best January since 1987. In turn, I am calling this the best January ever as the US was coming out of a recession in the 80’s which lead to “Black Monday” in October 1987. It’s merely the time-frame that I am focusing on as a lot has happened in a matter of 60 days, compared to any other 60 day time period.
When you go from the worst December to the best January to one of the best RRSP seasons ever, that, in turn, defines market volatility. Now that RRSP season is behind us, I thought that I would share some of the returns that we’ve experienced in the past two months. Here are year-to-date returns for three of the main stock exchanges that we follow on a day to day basis:
When you put these together, you can build a rolling average return utilizing what’s called the S&P/TSX Composite Index, and this return was 9.95%. Considering we came off a fairly rough December, we’ve officially recouped some, or most, of our losses from 2018. I expect that the pressure of volatility is on the rise as we continue down the path of 2019. It is important to remember that volatility is not something to shy away from; there are benefits to staying the course and managing through the ups and downs.
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