The S&P 500 fell almost 7% in the third quarter. Combined with recent volatility, the decline prompted many worried investors to contact their advisors. Even though most advisors caution clients not to be concerned with short-term results, many investors continue to view performance that way.
With that in mind, it might be helpful to look at some statistics compiled by Sam Stovall, U.S. equity strategist at S&P Capital IQ. In a recent note, Stovall revealed that, since 1945, the S&P 500 has risen 77% of the time in the fourth quarter. Whats more, the average move was a gain of 3.8%.
Of course, in investing there are no guarantees. Sometimes, the fourth quarter is dismal. Weve started this Q4 on a high note, with S&P 500 closing up 8.3% in October, its best month since October 2011.
What follows are statistics from S&P Capital IQ on the fourth-quarter performance of the index in the best and worst final periods since 1945.
The wide range of results, from up 20.9% to down 23.2%, should be Exhibit A for advisors whose clients want to change asset allocations. Even though most fourth quarters are positive, the influence of external events can affect short-term results. The real takeaway for clients is that stocks have risen far in excess of inflation over the long term.Joseph Lisanti
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