Volatility has returned to the market thanks to uncertainty around inflation and trade policies. But always bear in mind that day traders care about minute-by-minute swings in stocks prices, but long-term investors sidestep such concerns. Let’s step back and gather some perspective by reviewing the data.
According to LPL Research—
- The average intra-year pullback (peak to trough) for the S&P 500 Index since 1980 has been 13.7%.
- Half of all years had a correction of at least 10%.
- Thirteen of the 19 years that experienced an official correction (10% or more) finished higher on the year.
- The average total return for the S&P 500 during a year with a correction was 7.2%.
These bullet points are an evidenced-based way of saying turbulence surfaces from time to time. Patient investors who don’t react emotionally have historically been rewarded.
Some degree of risk in the market is inevitable. But the best approach to reaching your financial goals must be designed to minimize risk, and are designed with your long-term goals in mind.