Stocktake: Record roller-coaster year for stock markets

"Risk happens fast," LPL Research strategist Ryan Detrick commented last week following the sudden market downturn. It certainly does. The S&P 500 enjoyed its best two-day start to September in 10 years; within three days, it had endured its worst five-day start since 1987. The Nasdaq took only three days to go from all-time high to being down 10 per cent – its fastest double-digit correction in history. Indeed, everything is happening fast in 2020.

In March, it took the S&P 500 only 17 trading days to fall into bear market territory, the fastest 20 per cent decline in history. It took 22 days for the index to fall 30 per cent, the fastest-ever 30 per cent drop. Volatility, as measured by the Vix index, hit an all-time high that same month.

History’s fastest bear market was also the shortest; after losing over a third of its value in a month, the S&P 500 subsequently enjoyed its fastest recovery and biggest five-month gain in history.

Even after the recent weakness, the S&P 500 is still in the black for 2020; if stocks hold on to their gains, it would be the first time the index ended the year in positive territory after being down over 30 per cent. This has been a crazy, record-breaking year. September’s action suggests investors should brace themselves for further twists and turns.