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Market Volatility
It's Possible to Profit from Patience
It’s nearly impossible to time the market and identify its peaks and troughs. If history is any guide, short-term drops in the stock market are typically followed by longer-term rallies.
Stay invested for market recoveries
The graph below shows that after market corrections (defined as a drop of at least 10%), the stock market typically recovered lost ground after three to six months. For two of the four bear markets (defined as a drop of at least 20%), stocks were back to their prior levels within four to five years. In 2020, the coronavirus shock lasted even shorter than other bear markets, and stocks returned to prior levels within five months.
RECENT BEAR MARKETS AND CORRECTIONS
Occurring between January 2004 and December 2023
Following a drop of at least 10%, the stock market has historically recovered within three to six months. After a drop of at least 20%, which indicates a bear market, recovery occurred within four to five years.
QE = quantitive easing.
Reflects an investment of $1.000 on December 31, 1991. There were no corrections or bear markets between 1991 and 1999. Drop is based on the percentage drop from the highest markel index value just prior to the correction to the lowest market index value. Recovery is defined as the length of time for the market to return to the previous highest market Index value, rounded to the nearest number of months.
Sources: T. Rowe Price and S&P. See Additional Disclosures.
RECENT BEAR MARKETS (GLOBAL FINANCIAL CRISIS, CORONAVIRUS SHOCK, AND UKRAINE CRISIS) AND CORRECTIONS (ALL OTHER EVENTS)
Occuring between January 2004 and December 2023
Drop is based on the percentage drop from the highest market index value just prior to the correction to the lowest market index value. Recovery is defined as the length of time for the market to retum to the previous highest market index value, rounded to the nearest number of months.
Sources: T Rowe Price and S&P. See Additional Disclosures.
Don't let volatility change your plan
Market volatility is a given. Short-term downturns can be disconcerting, and they may heighten anxiety among some investors. If the stock market 's historical trends hold true, a patient investor who outlasts short-term volatility can benefit over the long term.
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Important Information
This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular investment action. This information is not intended to reflect a current or past recommendation concerning investments, investment strategies, or account types; advice of any kind; or a solicitation of an offer to buy or sell any securities or investment services. The opinions and commentary provided do not take into account the investment objectives or financial situation of any particular investor or class of investor. Please consider your own circumstances before making an investment decision.
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