S&P 500 had its best kick-off in 30 years - March 06, 2019

S&P 500 had its best kick-off in 30 years

After an outstanding January, bull market went on in February, leading S&P 500 to gain 11.1% in just two months. This is the index’s best performance since 1987. What’s more, historical data shows that when January and February gained, S&P 500 mostly have a positive year, often with a double-digit rise.

After S&P 500 had its best January since 1987, it soared even higher. With gains continuing through February, the index had its best two months in 30 years. This kickstart of the year is also close to historical records.

11% in two months

Why? Because rallies like this are rather rare. In January S&P rose 7.9%, in February it gained another 3%. This means a 11.1% year-to-date rise in just two months. How rare is that? A rise like this didn’t happen since 1987. According to Jodie Gunzberg, Managing Director, Head of U.S. Equities at S&P Dow Jones Indices this “is the 5th biggest gain to start a year in all of the history of the S&P 500”.

S&P 500's gain in January and February

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The last year that did better than 2019 was 1987 with a 17.4% gain. Also, other “years with bigger gains in their first two months were 1975, 1943 and 1931 with respective returns of 19.0%, 12.3% and 16.9%”. These numbers show how extraordinary year the US stocks have so far.

Bright prospects for 2019

Ever since the beginning of 2019, we believe that this year has great investment opportunities. Numbers add up so far, and Jodie Gunzberg also underlined some data that support positive sentiments. “Historically, when January and February each gained, there has been a significantly positive year”, she wrote on Indexology Blog.

S&P 500's historical record gains in January-February

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She also underlined that “since 1938, when both January and February were positive, the year ended up on average more than 20%, and was positive 29 of 30 times”. In 26 out of 30 times there was a +20% gain. What’s more, that one time when the index ended the year negative, it was only a 0.002% fall. She also mentions that S&P 500’s volatility significantly dropped in the last month.

It’s even more since Christmas

The rally is even more compelling if we look back at last Christmas, when a selloff came to the markets. Ever since then, S&P 500’s value rose by 18%. That’s why we (and others, like Blackstone’s Joseph Zidle) said that missing out the beginning of 2019 to reinvest or rebuy might be a mistake for investors.

S&P 500's gain since Christmas

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After 2018’s market correction, we and many other analysts expected this gain. Of course, even in situations like this proper diversification is needed, and for the most of us it’s also better to focus on investments instead of day trading. There’s also a chance that there will be dips in prices (during those times discipline will be essential to maximize returns) but altogether we’re still optimistic about this year’s performance on the stock markets.

Disclaimer: This analysis is for general information and is not a recommendation to sell or buy any instrument. Since every investment holds some risk, our main business policy is based on diversification to minimize threats and maximize profits. Innovative Securities’ Profit Max has a diversified portfolio, which contains liquid instruments. This way, our clients can maintain liquidity, while achieving their personal investment goals on the long term.