Parsing Yesterday’s Stock Market Slide

Oct 11 12:10 2018 Print This Article

No one knows if yesterday’s 3%-plus plunge in US equity prices is noise or the start of an extended decline. What we do know is that the slide wasn’t entirely unexpected given the strong relative and absolute performance of US stocks in recent history.

As noted in Monday’s review of global markets through an ETF lens, equities in the US have been on a tear lately. As of last week’s close, Vanguard Total Stock Market (VTI) was up more than 14% for the past year vs. a roughly flat performance for foreign stocks in developed markets (Vanguard FTSE Developed Markets ETF (VEA)) and a roughly 10% loss for emerging-markets equities (Vanguard FTSE Emerging Markets ETF (VWO)), as of Oct. 5.

Longer-run windows also show a dramatic edge for US equities. For the trailing three-year window, for instance, VTI is still up sharply (annualized 11.1% return) vs. VEA and VWO (+2.6% and +1.9%, respective), even after yesterday’s rout.

Read More

About Article Author

The Capital Spectator

CapitalSpectator.com is a finance/investment/economics blog that’s edited by James Picerno. The site’s focus is macroeconomics, the business cycle and portfolio strategy (with an emphasis on asset allocation and related analytics). In late-2009, the Eastern Economics Journal named Picerno as one of the nation’s “top economics bloggers”. Picerno is the author of Dynamic Asset Allocation: Modern Portfolio Theory Updated for the Smart Investor (Bloomberg Press, 2010) and Nowcasting The Business Cycle: A Practical Guide For Spotting Business Cycle Peaks (Beta Publishing, 2014). His articles on finance and economics have appeared in a variety of publications and news outlets over the years, including The Atlantic, Financial Advisor, BankRate.com, HorsesMouth.com, and Bloomberg Briefs: Economics. He also pens a daily economics column for the Saxo Group’s TradingFloor.com web site. Picerno has been writing about investing and macroeconomics since the early 1990s at Bloomberg, Dow Jones and other media groups before becoming an independent writer/analyst in 2008. He also offers consulting services on asset allocation and portfolio strategy, the US business cycle, and related data analytics in R and Excel.

Related Items

‘Black Monday’ is, umm, this Sunday

You better be watching this Sunday night or I don’t even know what to tell you. I know there’s football, this is for after… Welcome to “Black Monday,” a new Showtime comedy series that imagines the stock market crash of 1987 as the result of a rogue brokerage firm aiming to outfox the olde ...

Schedule for Week of January 20th

Special Note on Government Shutdown: If the Government shutdown continues, then some additional releases will be delayed. For example, this coming week, the new home sales and durable goods reports will not be released if the government remains shutdown - and probably delayed even if the government ...

Bogle’s Big Mistake

The world lost a legend this week. Jack Bogle had a greater impact on the average investor than anyone who ever lived. Bogle, however, was not an overnight sensation. The index fund, which he is best known for, wasn’t created until his fifth decade on the planet. I wanted to share the challenges h ...

Strong US Data, Trade Solace, & Consistent Fed Speak Drive Strong Dollar and Risk Narrative

The US dollar rally continues to be supported by strong US data, accommodative comments from Fed officials, and a very strong US stock market.  This week also saw big shifts in interest rate probabilities, the market shifted from seeing the next move go from a cut to now favoring a rate hike.  Ne ...

Stocks rally as hope mounts for U.S.-China trade deal

Stocks rallied Friday, with major indexes trading higher for a fourth session, on reports that stoked hopes for progress in trade talks between the U.S. and China. Optimism over a potential bilateral deal helped to offset worries about the prolonged partial government shutdown and mixed corporate r ...

Dollar supported by U.S trade optimism

Friday January 18: Five things the markets are talking about Improved market and investor optimism for Sino-U.S trade talks saw global equities and U.S stock futures climb in the overnight session. In commodities, crude oil prices are leading the rally, while sovereign yields back up and safe have ...

Book Bits | 19 January 2019

● The Age of Surveillance Capitalism: The Fight for a Human Future at the New Frontier of Power By Shoshana ZuboffReview via Los Angeles Review of Books Silicon Valley’s Phoenix-like resurrection is a story of ingenuity and initiative. It is also a story of callousness, predation, and deceit. H ...

Earnings Season Kicks into High Gear - Be Prepared to Profit

Earnings season began in earnest last week, with major financial companies being rewarded and helping to lead the market higher. It's one of four time periods during the year when publicly traded companies share their earnings results so that investors can get a sense of the financial health of eac ...

Reassessing the Rebound in Markets?

Fred Imbert and Silvia Amaro of CNBC report, Dow jumps more than 300 points after China offers a way to eliminate US trade imbalance:Stocks rose on Friday as investors cheered potential progress in trade negotiations between China and the U.S.The Dow Jones Industrial Average rose 336.25 points to 2 ...