As we head into the vinegar strokes of 2013 with the world awash with liquidity and ever ready to BTFATH, we note that the last time the S&P 500 saw two consecutive years when the index did not go negative year-to-date was 1975-1976. As Bloomberg notes, just as in 2012 and 2013, we have not seen one day close below the previous year's closing level but as Marketfield's Michael Shaoul comments "eventually circumstances will change sufficiently to make the equity market a treacherous place," and if history is any guide, just as 1977 saw stocks drop 15%, then 2014 may reacquant investorsd with what "risk" and "volatility" means in US equities.
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Of course, a 15% drop in today's environment would be crushing... with margin at record levels and the world rehypothecated to the nth extreme...
Source: Bloomberg