The Current Mid-Cycle Stock Market Correction

What Does It Mean Long Term For Your Stock Investments?

February 2, 2022    |    Sage Capone

When you have periods of volatility in the market, as we have recently, the media will often over emphasize the end of time narrative with the stock market correction. According to J.P. Morgan Asset Management the current intra-year decline, or market drop, from peak to a trough slowdown is within the market average of 14%.

  Chart of S&P Intra-Year Declines Vs Calendar Year Returns

S&P Intra-Year Declines Vs Calendar Year Returns

Where Your Investments Are In This Current Market Correction

Where are we in this Mid Cycle Correction? The correction has been taking place behind the scenes since February 2021. The reason most investors have only begun to notice the sell off now is because they’re largely invested in funds that track the indexes.

The March 2020 pandemic positioned a large amount of capital into stocks making them over valued and the market is beginning to correct this human behavior. Market corrections and drawdowns are normal but remembering your financial plan can help you be rewarded in the long run.

Staying invested and ignoring day to day noise as policymakers face difficult decisions with an overvaluing economy and inflation. Place faith in history that has rewarded long-term investors. Vanguard shared a graph with a recent lesson of the 2020 market pullback, seen below.

Value of $1 Million Investment in S&P 500 During Entire Year of 2020

The Value of  $1 Million Invested in S&P 500 Index Over 2020

Need Insights On Your Investments?

The cycles of a stock market can be confusing and even alarming. That’s why a long view on these changes is needed, to figure out the trends and where they’re truly headed.

Contact us today for a free consultation and learn what the possibilities are for your investments, your retirement and your loved ones’ futures.

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