Smart Investors Embrace Corrections

By now, you have probably seen the headlines…The Dow Jones had its largest single day point drop in history. We need to make sure you have historical context of market declines as the media is going to do its best to scare you and fear has no place in your investment plan.

Here is some context: We have not seen a correction (10% decline) since early 2016, and that short-lived market drop barely qualified as an official correction. The S&P 500 has risen 18 of the last 20 quarters and has not had a negative quarter since late 2015. The stock market has not dropped more than 3% from its previous high in the last 455 days, easily breaking a record.

Given that lack of volatility, it is easy to forget that stock market pullbacks and corrections happen all the time (usually 1x per year)…have patience, discipline and make good decisions. Successful investors know corrections are going to happen, do not get shaken when they do and continue on with their investment strategy.