Reacting to a Market Correction – March 4, 2020
Since 2009, there have been 16 pullbacks in the S&P 500 Index2 ranging from 5% to nearly 20% (CNBC).
From 1974 – 2020, we’ve had 24 pullbacks of at least 10%, which is considered an official market correction (Charles Schwab).
- Four have turned into bear markets (greater than 20% decline).
More stats (Charles Schwab):
Since 1966, the average bull market has lasted 2,300 days. The average bear market has lasted 512 days.
- Average bull market return: +220%
- Average bear market return: -39%
Past performance no guarantee of future performance.
Bull markets eventually come to an end. Bear markets can begin abruptly, and they can end abruptly.
For the last 200 years, bull markets have followed a bear market, and major U.S. indexes have gone on to new highs.
Investor’s corner
We are not predicting a bear market. Historically, volatility has been short-lived, but no one knows when the market will put in a bottom.
Steps to consider—
What is your risk tolerance, which helps determine the appropriate mix between stocks, bonds, and other asset classes?
Rebalance by selling assets that are above your target levels and purchase those that have fallen below your target.
Develop a holistic financial plan. It prevents you from making rash decisions when markets get bumpy. It takes setbacks into account. It is a roadmap to your financial goals.
Created 2020-03-04 15:56:38