Slipping on a banana peel.
Those of us who have lived through market corrections, know that the statement “Markets take the stairs up and the elevator down.” is 101% true. Even if you are a newbie in the realms of trading, just go back some ten years on the S&P chart to see how bad corrections are compared to rallies. From this perspective, taking the elevator would be too classy; most probably it’s a jump out of the window.
In this sequel of the Extremistan, we’ll be simulating the S&P returns using those same 4,529 working days—to avoid skewed results—, however, instead of erasing gains we’ll be erasing the DOWN DAYS.
What a blessing. We’ll be ERASING from History, the top 10 largest daily point LOSSES, leaving just the fun. Before revealing the results, let’s recapitulate some previous Extremistan numbers:
_ S&P total return in 18 years: 96.88%
_ S&P total return without the 10 largest daily point gains: 7.85% (–12.34)
_ S&P total return without the 10 largest daily percentage gains: 3.17% (–30.56)
If removing the top 10 up days from 18 years of data would’ve brought us misery, conversely, without the top 10 DOWN days, we would’ve been rich, right? 1,200% return? 3,000% return?
Yippee Ki Yay.
262.72% is all you would’ve got. It’s not that bad, 14.60% per year on average, +2.71 times more return. However, because we’re on the Extremistan World we were expecting, at least, to be Gods of Thunder.
Instead, we’ve slipped on a banana peel.
Chart of the Day
S&P 500 Returns
From May 10th, 2000 to May 10th, 2018.
Video of the day
How to Prepare for Events
As a trader, always measure your risk before an event. Learn from Coach T’s Trading Thought of the Day.
Today’s Lineup
Coaches Lounge 11am EST
Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.
Halftime Report 12:30pm EST
The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day and fun in a way that only Matt and Tim can deliver.
Cash Flow Club 8:30pm EST
I would change it to “Held every Thursday, this show helps you perfect your favorite cashflow strategies..
