Corrections are anxiety-provoking.
They make us wonder if we got it wrong. If we’re going to be ok.
If this time is “different.”
After all, the S&P 500 plunged “at unprecedented speed,” and this was the “worst point drop in history.”1
Should we give in and get out? Sit on the sidelines until it all blows over?
Market corrections are completely, boringly normal.
Whether it’s an epidemic, geopolitical saber-rattling, natural disaster, or a financial event, corrections happen regularly. They’re a natural part of the market cycle.
Here’s the historical take: Markets experienced 26 corrections between 1946 and 2018. On average, markets declined 13.7% and took four months to recover.2
To a long-term investor, a correction is a speed bump.
We can’t predict how long or how deep this correction will be, but we’ve been here before.
And markets have recovered.
Corrections are not something to panic about. Even when panicky headlines are everywhere. The 24-hour media cycle is all about stoking fears to draw eyeballs and shares.
The biggest mistake a long-term investor can make right now is to give in to the fear and make a big change in response to the selloff.
Emotional reactions to markets — whether it’s euphoria during a rally or anxiety during a correction — are deadly to long-term success as an investor.
It’s easy to answer a risk tolerance questionnaire and commit to a strategy when the market’s up.
It’s much harder to stick to the strategy when your portfolio drops. When it’s gut check time.
But you can’t reap the rewards of long-term investing if you don’t take the bad days along with the good.
We created your strategies to withstand turbulent markets. To pursue your long-term goals in all market environments.
We’re watching markets closely and will communicate with you if calculated changes to your portfolio are necessary.
Right now, we’d like you to do 3 things:
- Take a deep breath and remember that you’ve got a team of professionals behind the wheel.
- Trust the process. Remember the conversations we had about your goals and the reasons behind the choices we made together.
- If you’re experiencing anxiety, turn off the news, stay off social media, and go do something fun.
If you need a pep talk or to discuss your investment strategy, please reach out to your advisor. We’re here for you and happy to talk.
PFG Private Wealth Management, LLC
Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.
This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only. The S&P 500 is an unmanaged group of securities considered to be representative of the stock market in general. Indexes are not available for direct investment. The performance of the index excludes any taxes, fees and expenses. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
PFG Private Wealth Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. This material and information are not intended to provide tax or legal advice. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance. Insurance products and services are offered and sold through Perry Financial Group and individually licensed and appointed insurance agents.