How Common is Market Volatility?

Do this year’s volatile markets have you concerned?

Check out this chart. It shows the S&P 500’s intra-year decline vs. calendar year return from 1980-2021. What exactly is an intra-year decline? An intra-year decline is the largest drop from market peak to market trough in any given year. 

The average intra-year decline for the S&P 500 since 1980 is -14%! Despite this, annual returns have been positive in 32 of the last 42 years, with an average calendar year return of about 10.5%.

What does this mean to you?

Market declines are very normal and to be expected. Our portfolios are built with that in mind. As investors, the most important thing we can do is block out short-term noise and remember our long-term goals. In fact, periods of market turbulence can often be exploited and used to your advantage.  As we like to say, “Don’t sweat volatility, embrace it!”