The market had a bad day yesterday. Sometimes when this happens, the headlines make it seem like the world is going to end. Sensationalism sells. In fact, it sells so well that even days that are really only small dips are described like the sky is falling. So, I usually try to avoid getting caught up in the hype when a lot of it is just noise.
Yesterday however, was not hype. The S&P 500 doesn’t go down -3.35% very often. To put it into visual context, here are the most recent ten times this has happened:
Pretty insane that this chart goes all the way back to 2011. I think that speaks to the lack of single-day volatility since the financial crisis.
Now, if you look in the grand scheme of things back to 1928, a loss of -3.35% isn’t even in the bottom 1% of all loss days for the S&P 500. But, of course, that factors in times like the Financial Crisis and Great Depression, so that makes sense. If you take those terrible stock market periods out of the sample then yesterday’s loss is for sure a tail event.
One day doesn’t make or break the market though. We should expect things like this to happen from time to time. Let’s all take a deep breath and remember that volatility happens. At the very least, it’s not as bad as that -6.7% day in the chart!