The history of the S&P 500 dates all the way back to 1871, thanks to the work of the Cowles Commission in the 1930s which reconstructed an index of stock prices back that far. That index eventually morphed into the S&P 500 we know today.
I mention this history because we have just seen one of the quietest 2-year periods in the S&P 500 in all of its history. That’s fun to know, but so what? The ‘so what’ comes from looking at what has followed similar low volatility periods in the past. Generally speaking, the answer is that the market starts moving upward again.
Perhaps the best example was 1994-95 when this 2-year range measure hit an all-time low of 7.1% (based on monthly closing values). The 1995-98 rally which followed was one of the best and strongest bull markets ever.
This post was published at FinancialSense on 08/12/2016.
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