Days like this (Dow down 724) virtually require, say, 4 blog posts (by 3 pm).
You may recall, or perhaps not (given recent action), that 2018 started out like gang busters. In fact it was the 7th best start to a year (as of Jan 23rd) in stock market history.
While we should never presume that history will repeat itself (although it's okay to think a la Mark Twain that maybe it rhymes), it doesn't hurt to look at similar periods in the past just to get a feel for the possibilities (like we did in the video this morning).
With that in mind, here's the table we featured back on January 24th (2 days before the market peaked and descended into a 10% correction) that looks at the 10 best January 1-23 periods in history.
As you can see (far right), those years with great starts suffered some serious volatility throughout the remainder of the year, while (4th column), other than 2 years during the Great Depression (really bad general conditions), the entire year turned out nicely positive (save for epic crash year 1987, up just 2%):
Bottom line, as we preach here ad nauseam, short-term volatility is part and parcel to being in the market, regardless of general conditions.
In case you're wondering, so far 2018 has seen a 10.2% draw down (from the peak on January 26th); somewhat less (so far) than the average during similar years.
In other words, despite today's action, this remains one sissy of a correction...
Chart courtesy of Bespoke Investment Group...