David Jane: Smoothing the bumps and running from bears

Equity markets are volatile and, while deep bear markets are relatively infrequent, corrections are a regular feature. The following chart shows the biggest peak to trough fall by calendar year for the S&P 500 index. While the down years stand out as having relatively big drops, 5% to 20% drops occur frequently - even in ‘up years' - and it is rare that there is a year with no material fall. S&P 500 Worst Annual Drawdowns: 1950-2016 Source: awealthofcommonsense.com - ‘The Expectation of Losses', posted on 16/05/2017 by Ben Carlson The market has been on a steady upward rise si...