The stock market is seeing frequent surges of volatility. This is stressful for many, especially if you’re frequently checking on your portfolio.
Whenever markets turn negative, people often ask: Should I get out? Should I sell?
Volatility and corrections in the face of bad headlines are normal and occur regularly. In fact, pullbacks of 5 percent happen about once a year. We can expect to see a serious 10 percent correction about every 18 months and a true bear market about once every six years.
And here’s the flip side: Just as quickly as markets drop, they can rise again. For example, we’ve learned since 1974, the S&P 500 has historically gained 24 percent one year after the bottom of a market correction.
Now, that doesn’t mean that the past can predict the future, but it can be a useful guide.
If you’re not in the market when it moves, you’ll lose out on all those gains. You may be thinking, ‘Well, I can get out before the bottom and then jump back in.’ If it were that easy, we’d all do it. No one knows where the bottom is until it’s past, and selling risks missing out on the whole thing.
- Bad headlines sell. That’s why we see them all the time. The reality is usually much more complex, and market movements shouldn’t be accepted at face value.
- The reason you pay a professional to look after your financial life is so you can share your worries and have someone help you take action.
If you have a question about what’s going on with markets or what you should do next, schedule a 1-on-1 call with John Williams.