It’s Leap Day 2020, which got us thinking: Is there anything we can learn about market performance, particularly after this past week’s rout?
For starters, let’s be thankful it is Saturday, because stocks drop about two-thirds of the time on leap days. That’s worse than the average day, when stocks go up a little more than 50% of the time, and the average daily return is slightly positive. That makes sense given that the market tends to go up over time.
Leap years, however, have been good for the stock market. The S&P 500 has gone up a better-than-average 80% of the time during year with an extra day. The average return in a leap year, though, is about 11%, a little below the 12% long-term average. The S&P 500 returned about 12% in 2016, the most recent leap year. The Dow Jones Industrial Average returned more than 16% that year.
These stats provide some hope after this past week’s drop, but investors should beware small sample sizes. The data set has 23 observations in it. With only one independent variable—market return—that’s enough observations to have meaningful math. But the differences from the averages in returns and the likelihood of positive or negative returns aren’t significant.
Still, sometimes the numbers are fun to know. And with both the Dow and the S&P 500 down 11% in 2020, they offer a touch of hope.
Write to Al Root at allen.root@dowjones.com
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March 01, 2020 at 01:00AM
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What History Says About Stock Market Performance During a Leap Year - Barron's
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