Opinion – Grain in Grain: Are your BDRs going down? Find out how many times the American stock market has fallen like this month

The devaluation of international assets has scared many investors who were lured by three years of gains. Unaccustomed to such an intense and rapid drop, many investors wonder how often it has occurred in the past.

According to a survey by B3, released on December 14 of last year, of its more than 2 million investors, 86% already invested or were interested in starting investments in this category.

Considering the relative performance of the two markets, many were drawn to better performance and lower risk in the past. However, this January, they discovered that the stock market has risk, whether in Brazil or internationally.

I did a survey to put, in perspective, the intensity of the fall observed this month. But first let’s do a little Quiz.

Since 1929, that is, in the last 1,105 months or 92 years, in how many months has the US stock market fallen by 8.6% or more?

a) 10 months;
b) 40 months;
c) 60 months;
c) 90 months;
d) 110 months.

The American stock market, represented by the S&P 500 index, has already fallen by 8.6% this January.

The chart above presents the frequency distribution of S&P500 returns over the past 92 years.

You can see that drops in the magnitude of the current month do not occur often.

Because it is a rare event, that is, it occurred in only 3.6% of the months since 1929, investors can imagine that the worst is over.

However, the statistics are not favorable for this conclusion. Of the 40 months that the American stock market fell by 8.6% or more, 55% of the time, that is, in 22 months, the following month was also negative.

Thus, it is recommended to analyze whether your risk position considers a long-term horizon and is suitable for your investor profile.

This review is relevant so you don’t have to make hasty decisions in the heat of the moment.

Michael Viriato is an investment advisor and founding partner of Investor’s House

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