A correction is defined as a decline of 10% or greater from a recent high in the financial markets. Corrections can last anywhere from days to months, but few have lasted longer. Recently, we’ve seen a bumpy ride, and many people are looking for context as to what this might mean for their financial future.
Stock prices have bounced in-and-out of correction territory, as investors attempt to measure the economic impact of the COVID-19 virus. During periods of volatility, it’s important to remember that stock market corrections are not unusual and represent a normal part of the investing cycle. While the performance of any single year can deviate significantly from historical norms, on average, we see bear market corrections of 20% or more about every 3-4 years. The current situation of the market reacting to COVID-19 is impactful, but markets adjust all the time.