Will there be a correction in the market?

One of the questions I get a lot is, “Will there be a correction in the market this year?”

The easy answer to this is “Yes, probably.”

It might be best to just look at history for an answer rather than it being clouded by current events and our own political views and biases – although we always need to add that Past performance is no guarantee of future results or events.

Let us look at this graph that shows 3 things about the S&P 500 over the years:

1. Intra-Year Highs – the highest the market got to in the year – represented by the diamonds.
2. Intra-Year Lows – the lowest the market got to that year – represented by the dots.
3. The Actual Returns / Losses for that year – shown as the bar chart.

Looking back, there was an average drop/correction in the market of between 8-15% down basically almost every single year, averaging over this time period a drop of 13.8%

In many camps that would create panic, but when also taking into account the highs, had you invested money and left it alone in the market over this period, the Actual Rate of Return was up 11.94%

My thoughts are that we should EXPECT market corrections. It comes with the territory of investing. The “Downs” are also accompanied by the “Ups” and we cannot have one without the other.

The question then becomes, “Should I be trying to time the market, and get out before the downward correction, and then get back in before it goes up again?”

I would unequivocally say a big YES IF you had knowledge as to when that would happen. The problem is that none of us do. There are so many factors that cause volatility in the market and most of the time the so-called “Experts” get it wrong. See below the cost of trying to time the market.

If you missed the best 12 days in the market or more, you would have had a ZERO to Negative return. The Key – Have a well-diversified portfolio that is designed to match your long-term goals for your family.

About Dave

Dave Coen is a Retirement Income Certified Professional (RICP®) and Financial Advisor with SageView Advisory, and CEO of College Planning America. Along with his retirement financial industry experience, he is a College Planning Specialist. He works closely with individuals and families to provide comprehensive financial planning that addresses all elements of their financial picture. Learn more by connecting with Dave on LinkedIn. Please feel free to contact me if you would like to discuss how we can help you with your family’s plan either in person, over the phone, or on Zoom

4000 MacArthur Blvd, Suite 1050, Newport Beach, CA 92660 Tel: 714-813-1703 davec@collegeplanningamerica.com / dcoen@sageviewadvisory.com

This material is designed to provide accurate and authoritative information on the subjects covered. It is not however intended to provide specific legal, tax, or other professional advice. For specific personal assistance, the services of an appropriate professional should be sought. A diversified portfolio does not assure a profit or protect against loss in a declining market.

SageView Advisory Group, LLC is a Registered Investment Adviser. This report is for informational purposes only and is not a solicitation to invest. Advisory services are only offered to clients or prospective clients where SageView Advisory Group, LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future results. No advice may be rendered by SageView Advisory Group, LLC unless a client service agreement is in place. CA insurance license #0G82578