Is December's stock market sell-off a bad omen?

Although buying after stocks take large monthly damage has mostly proved profitable, the tactic has not been foolproof; about one third of the time, it would have caused significant short-term regret

John Rekenthaler 8 January, 2019 | 6:00PM

December brought an unfamiliar emotion: investment dismay. For the first time in a long while, stock market problems made the headlines. Few U.S. adults entered the New Year without realising that equities were slumping. Most, however, shared my position: I knew that stocks were down, but not by how much, nor how the month rated among stock market history.

The S&P 500, it turns out, had a total return of -9.03% in December 2018, in U.S. dollar terms. That places the month as the 11th worst over the past half century, from 1969 until the end of 2018. Which sounds a bit worse than the reality.

Although only 11 months had monthly losses of at least 9%, another seven fell between 8% and 9%.

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John Rekenthaler

John Rekenthaler  John Rekenthaler is Vice President of Research for Morningstar.

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