20 Reasons the Stock Market Has “Plunged” Since 2010, and 1 Remarkable Constant

This probably goes without saying, but the stock market can be a fickle creature at times. Earlier this year, investors watched as, in 13 calendar days, all three major U.S. indexes shed 10% of their value. It represented the first stock market correction in two full years. And while corrections often seem to catch investors by surprise, they’re anything but uncommon.

According to data provided by market analytics company Yardeni Research, there have been 36 corrections totaling at least 10% since the beginning of 1950 in the S&P 500 (SNPINDEX: ^GSPC). That works out to about one correction every two years in the broad-based index.

Image source: Getty Images.

20 catalysts that have caused panic in the stock market since 2010

What’s more, there have been a broad gamut of issues responsible for pushing the stock market lower at times. With these catalysts laid out, it probably looks as if there’s no winning for investors. Since 2010, here are 20 reasons stocks have “plunged,” at least according to various news outlets and headlines.

  1. Britain voting to leave the European Union (Brexit).
  2. The possibility of Italy following in Britain’s footsteps out of the EU.
  3. Rising interest rates, which could push investors out of equities and into bonds.
  4. The Federal Reserve not hiking interest rates in September 2015, thusly signaling a cautious tone on the U.S. economy.
  5. Rising 10-year Treasury yields.
  6. Falling 10-year Treasury yields, such as when yields broke below 2%.
  7. Escalating tensions between the U.S. and North Korea.
  8. Libyan turmoil and concerns about Libyan oil production.
  9. Software-based flash crash.
  10. The ongoing European sovereign debt crisis.
  11. Worries that Spain would be unable to bail out its banks in 2012.
  12. Standard & Poor’s downgrade of the United States’ credit rating in August 2011.
  13. The Boston terrorist attack in 2013.
  14. Poor jobs data.
  15. Fake reports of an attack on the White House in April 2013.
  16. Weak housing market data and high foreclosure rates in the early 2010s.
  17. Tumbling oil prices in 2016.
  18. Rapidly rising oil prices putting pressure on consumers via gasoline prices at the pump.
  19. An economic slowdown in China in 2015.
  20. The U.S.-China trade war.

Image source: Getty Images.

To be crystal clear, this isn’t an all-encompassing list. These are just some of the incidents that stand out since 2010. If I were to spend time scouring each and every triple-digit move lower in the Dow Jones Industrial Average, there’s a good chance I could double, triple, or even quadruple the number of downside catalysts relative to what’s presented above.

The one intriguing constant among all of this

Yet in spite of what seems like absolutely dire news at times, there’s been one constant: The stock market continues to head higher over the long run. No matter what’s been thrown at investors over the short term, they’ve had no trouble putting these concerns safely into the rearview mirror.

In even simpler terms, it demonstrates that nearly all of the concerns that impact Wall Street tend to be based on short-term thinking. These concerns rarely have a lasting impact on time-tested business models, which is why the world’s most innovative and broad-reaching businesses tend to outperform over the long run.

Data source: Yardeni Research. Table by author. Correction length listed in calendar days. Red represents corrections lasting longer than 365 days, yellow between 120 and 365 days, and green less than 120 days.

As further evidence, Yardeni Research has provided data on the number of calendar days that it took to go from peak to trough for each of the aforementioned 36 corrections in the S&P 500 since 1950. Of the 36 corrections of at least 10%, 22 lasted for fewer than 105 days. As a whole, the average correction typically lasts just 196 calendar days, which is considerably shorter than the length of the average bull market.

So, what’s an investor to take away from all of this? Namely, that trying to guess when stocks will correct, why they’ll correct, or how much they’ll correct by, is nothing more than a crapshoot. And, perhaps even more importantly, that buying and holding high-quality stocks over long periods of time is a good way to move beyond the white noise and short-term thinking that lead to volatility in the first place.

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