What follows one of the worst Januarys in history?

THE S&P 500 is on track for one of its worst January performances since 1929 having fallen nearly 9 per cent at its lows for the month. Looking back to 1929, there have only been 10 previous episodes of a fall of more than 5 per cent, putting January 2022 in rarified air.

While the most recent episode of such a large January drop was in 2009 in the midst of the global financial crisis, a look across the decade of events highlights a number of commonalities as well as differences that can help us understand what might lie ahead for investors over the balance of the year.

Six of the 10 years in which the January stock market performance was unusually weak - 1960, 1970, 1990, 2000, 2008 and 2009 - coincided with a US recession as measured by the National Bureau of Economic Research (NBER).