Estimating The Downside
Estimating the Downside - June 2020
As the S&P 500 rallied 4.5% over the course of May, forward earnings estimates continued to crumble.
Estimating the Downside - May 2020
The historically reasonable prices didn’t last long (although they may return) as April’s +13% S&P 500 bounce pushed our downside-to-median estimate from -12% to -24%—right back to where we were at the end of February.
Estimating the Downside - April 2020
A nice, round -20% Q1 haircut for the S&P 500 took most of the stuffing out of our downside-to-median estimate.
Estimating the Downside - March 2020
The last week of February generated a lot of interest in the vignette.
Estimating the Downside - January 2020
In December, the S&P 500 advanced for the fourth consecutive month, finishing the quarter with an 8.5% gain.
Estimating the Downside - December 2019
During November, the S&P 500 advanced for the third consecutive month, posting a 3.4% gain.
Estimating the Downside - November 2019
The S&P 500 rose 2.2% in October and ended the month just a day removed from setting an all-time high.
Estimating the Downside - October 2019
The S&P 500 erased the modest losses of August and ended September +1.7%.
Estimating the Downside - September 2019
After a gut-check plunge to start the month, the S&P 500 oscillated in a 4% range as investors weighed the trade war, dropping interest rates, and central bank accommodation.
Estimating the Downside - August 2019
The S&P 500 set a fresh all-time high in July and ended the month with a modest 1.3% gain.
Estimating the Downside - July 2019
The S&P 500 spiked 6.9% higher in June, recouping nearly all the loss incurred in May.
Estimating the Downside - June 2019
The S&P 500 tumbled 6.6% in May, erasing the previous two months’ gains.
Estimating the Downside - May 2019
The S&P 500 turned in its fourth consecutive monthly advance in April, rising 4%.
Estimating the Downside - April 2019
At the end of December, valuations were finally starting to look interesting again as our S&P 500 downside to median estimate was “only” -13%.
Estimating the Downside - March 2019
The S&P 500’s 3% advance in February caused our downside to median estimate to move 3% in the opposite direction.
Estimating the Downside - February 2019
Alas, December’s cheaper valuations may have only been temporary.
Estimating the Downside - January 2019
December’s 9% drop in the S&P 500 made this vignette a lot more interesting.
Estimating the Downside - December 2018
An eleventh hour surge in equity prices salvaged a positive month for the S&P 500.
Estimating the Downside - November 2018
The month of October made this vignette a lot more interesting.
Estimating the Downside - October 2018
The S&P 500 squeaked out its sixth consecutive monthly gain in September.
Estimating the Downside - September 2018
The S&P 500 gained 3% in August creating a fresh all-time high for the index.
Estimating the Downside - August 2018
The S&P 500 got within spitting distance of its January high (price) by gaining 3.6% in July.
Estimating the Downside - July 2018
The S&P 500 squeaked out a monthly gain for June—earning a “turkey” of three positive months for the second quarter.
Estimating the Downside - June 2018
The S&P 500 held on to its early gains and settled 2.4% higher for the month of May.
Estimating the Downside - May 2018
After some price appreciation mid-month, the S&P 500 ended April right where it started.
Estimating the Downside - April 2018
Our monthly stock-slump streak has extended to two.
Estimating the Downside - March 2018
This multi-factor estimate of stock market risk is based on a regression to median stock market levels.
Estimating the Downside - February 2018
This multi-factor estimate of stock market risk is based on a regression to median stock market levels.
Estimating the Downside - January 2018
This multi-factor estimate of stock market risk is based on a regression to median stock market levels.
Estimating the Downside - December 2017
This multi-factor estimate of stock market risk is based on a regression to median stock market levels.
Estimating the Downside - November 2017
This multi-factor estimate of stock market risk is based on a regression to median stock market levels.
Estimating the Downside - October 2017
This multi-factor estimate of stock market risk is based on a regression to median stock market levels. The valuation comparisons in the detailed tables consider all inflation periods since 1957.
Estimating the Downside - September 2017
This multi-factor estimate of stock market risk is based on a regression to median stock market levels.
Estimating the Downside - August 2017
Based on 1957-to-date valuation metrics, the S&P 500 potential downside to median levels is -25%. Secular bear markets, however, fall well below median levels; based on a decline to the 25th percentile of 1957-to-date distributions, the S&P 500 would have to fall 36% to 1,591 (not a prediction).
Estimating the Downside - July 2017
This multi-factor estimate of stock market risk is based on a regression to median stock market levels.
Estimating the Downside - June 2017
This multi-factor estimate of stock market risk is based on a regression to median stock market levels.
Estimating the Downside - May 2017
This multi-factor estimate of stock market risk is based on a regression to median stock market levels.
Estimating the Downside - April 2017
This multi-factor estimate of stock market risk is based on a regression to median stock market levels.
Estimating the Downside - March 2017
This multi-factor estimate of stock market risk is based on a regression to median stock market levels.
Estimating the Downside - February 2017
The S&P 500 gained 1.9% in January. Based on the 1957-to-date valuation metrics presented, the potential downside compared to its historical average remained the same as last month’s reading (-21%).