The phrase “market correction” typically describes a decline of 10% or more from a previous high point in the market. In late August, the S&P 500 was down approximately 12% from levels earlier in the year.
This understandably has made many investors feel uneasy as they look at declining balances on their statements and many are left wondering if this is the time to take action to prevent further losses.
Attached is an article that discusses this very topic and takes a look through history to help us answer the question.
To summarize, our two biggest takeaways from the article:
1) Market fluctuation is a normal part of investing. There have been 28 instances of a “market correction” for the S&P 500 going back to 1926.
2) Investment performance in the years following a correction has generally been quite good.
So should an investor sell after a correction? No, an investor stays disciplined and diversified!
We hope you find the article insightful. As always, please do not hesitate to reach out to us with any questions you may have.