Putting the Current 10% Pullback in Perspective

On Thursday, March 13th, we officially entered our first 10% correction in the S&P in three years. If it feels unsettling, that’s because we’ve gone far longer than usual without a significant pullback. Historically, a correction of 10%+ happens every 10-15 months. But while corrections may feel rare, they are a normal and expected part of investing. I view this one as a reintroduction of risk in the market. If these declines don’t happen, then there would be no such thing as an equity risk premium, which has historically returned between 10-12%+ annually.

Since the lows of the Great Financial Crisis of 2009, we’ve had 30 market pullbacks of 5% or more. Some have been quick, while others have lasted months. The reasons vary (trade wars, recessions, interest rate fears, geopolitical tensions, etc.) but the market has recovered from every single one. For you baseball fans, this is called batting 1,000. 

Just look at this table tracking all corrections of 5% or more since 2009:

Another reason for heightened concern? The point drops seem massive. Today, a normal 10% correction in the Dow, means a 4,500-point drop. A few years ago, that same percentage decline was just 2,000 points. The market is higher now, so the numbers look bigger, even though the percentage moves are the same.

And let’s not ignore the elephant in the room: politics. Whether you agree with the policies coming out of Washington or not, political uncertainty makes investors nervous. And there is a lot of it. Tariffs, anyone? DOGE. Papa Elmo (which apparently is a reference to Elon Musk on Twitter)? And when you mix money and politics, emotions run high. It’s always best to separate politics with investing.

But here’s the truth: Markets adapt. Businesses adjust. Innovation continues. Tariffs, policies, and economic cycles will come and go, but American ingenuity and capitalism endure.

That’s why we have an investment plan - one designed to work in good times and bad. Trying to predict every market move is a losing game. As Peter Lynch famously said:

Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.

If you’re feeling uneasy, remember why we invest: to participate in long-term growth, not short-term noise. Stay the course. History has rewarded those who do.