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A Scholar’s Metaphor for Equity Returns

Fred Snitzer
Published on February 22, 2019

In early February 2016, after the market began the year with its worst opening week ever and ended the month of January down -5%, we wrote that “this decline has zero predictive power as to the future returns in the stock market.” Fortunately for investors everywhere, this turned out to be correct, as the S&P 500 was up 12% during the year 2016 and 30.4% for the period 2016-2018.

Skip forward to this year, and after a brutal December 2018, in which the S&P 500 fell -9%, the market rebounded in January with a return of +8%. Does January 2019 have any more predictive power than January 2016? You know the answer as well as we do: of course not.

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