What Level of Market Correction Is Normal Historically? [Chart]

There's always some pain to endure.

This chart shows S&P 500 intra-year declines compared with calendar year returns. The bars represent year-end returns since 1980, while the purple dots mark each year's market low.

Buy and Hold investors must stomach significant drawdowns to get their returns — even in 'good' years.


140419 SP500 Intra-Year Declines vs Calendar Year Returns

via JP Morgan Funds.


Basically, you have to understand that 10-15% pull-backs are normal (perhaps even healthy) for the market.

According to Business Insider, here are market correction averages and their historic frequency. Since 1900, we've seen:

  • 5% market corrections: 3x per year.
  • 10% market corrections: Once per year.
  • 20% market corrections: Once every 3.5 years..


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