In the stock market, you have to take the bad with the good 📈
The stock market is a terrific place to build wealth.
But investing in the stock market can be an unpleasant process with many unplanned, yet frequent setbacks. Here are some highlights:
- One-day declines of 1%-2% happen frequently.
- One-day sell-offs of more than 3% aren’t that unusual.
- Almost half of all days are down days.
- Extended pullbacks of 5% or greater happen multiple times an average year.
- The average year sees a max drawdown of 14%.
- Bear markets happen.
This is all in the context of the stock market usually going up.
“Despite healthy gains, the S&P 500 has seen more than 30 pullbacks of 5% or more since 2009,” Truist’s Keith Lerner observed on Friday.
The longer you’re in the market, the more inconveniences and disasters you’ll experience along the way. So you should always keep your stock market seatbelts fastened, and be prepared for those unpredictable downturns.
But also, the more you extend your time horizon, the more likely you’ll generate a healthy positive return.
One of the bigger mistakes you can make as an investor is to walk away because of something bad that was historically and statistically likely to happen.
That’s just investing — and life!
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Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.
