Thursday, May 2, 2019

Published 9:04 PM by with 0 comment

Do Stocks Perform Better After a Gain or a Loss?

Simple question...do stocks do better the day after stocks go up or the day after stocks go down?
To test this, I used the daily S&P 500 gains from 1950 through 2018. If the S&P 500 went up one day, the next day's gain went into the 'after gain' bucket. If the S&P 500 went down one day, the next day's gain went into the 'after loss' bucket. Here is the distribution of gains in each bucket:


It's pretty clear there that stocks perform better following a gain than following a loss. The median values of those buckets are 0.1% and 0.0% for the 'after gain' and 'after loss' buckets respectively.


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