Putting Monday’s Market Drop In Context

    Chart by Bespoke Investment Group August 5, 2019

It would be hard to miss the news frenzy over Monday’s market drop. The major stock indexes closed down August 5, the result of accelerating trade tensions and a slowing global economy.

But it’s important to keep it all in context. Market pullbacks like this are not unusual.

Analysts at Bespoke Investment Group tell us that the S&P 500 index has experienced drops of 5% or more three times per year on average since the bull market first got underway in 2009. This is the second 5%+ pullback of 2019, they say.

They put together an interesting chart showing how many times each year the S&P 500 undergoes a significant decline. There were no big drops in 2017 (an anomaly), but 7 significant pullbacks in 2011.

The Takeaway: Market ups and downs are normal. They don’t necessarily “mean” anything. And despite these occasional downturns, markets have tended to trend upward over time, generating significant growth for long-term investors who want to maintain their spending power over time and protect their lifestyle. Don’t let market turmoil throw you off your game. When the financial news gets too sensational, just turn it off. Stay focused on your goals, and invest for the long-term.

About Mari Adam

Mari Adam, Certified Financial Planner™ has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!

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