The other day when the market was falling off a cliff I overheard one of the financial commentators say that this is currently the worst fourth quarter since 2003. When I hear comments like that I wonder, is that good news or bad news? Meaning, does that mean that the worst has happened and we're all good from here or does that mean that the worst is just beginning? To satisfy my need to know I did some research.

Currently the S&P 500 is down about 10.5% for the fourth quarter. Looking back through the entire history of the S&P 500, there are nine other times where the fourth quarter has lost 10% or more, which means it's already sort of a rare event, happening on average once every 10 years. Whether this is a good or bad thing depends on your time horizon.

Historically, when the S&P 500 had a double-digit loss in the fourth quarter, it led to a rather bleak first quarter of the year following, with an average decline of another 4.14%. Where it gets a little more interesting is when you look at the performance for the following year. While the average performance was basically flat at -0.35%, you can see that the bulls have a slight edge, winning 5 out of the 9 years. You might also notice that when the bulls win, they win big, with an average gain of 23.38%. This is a fancy way of saying when the markets do finish the year positive, it's certainly not a move you want to miss. When the bears win and the markets fall, well that's not good. The average loss is is 30%.

The biggest lesson in all of this is volatility. When the fourth quarter loses 10% or more, it seems to lead to a rather volatile next year. With a few weeks left in the fourth quarter, let's hope for at least a slight recovery.