The S&P 500 officially moved into correction territory yesterday – closing down 10% from the February high.
Every investor is asking the same big question… Now what?
So today, I thought I would share some statistics with you to hopefully try and decipher what stocks will do next.
In the past 46 years, there have been 24 10% corrections (including 2025). Of the last 23 corrections, the S&P 500 closed higher for the year 13 times.
Since 1980, the 16 times the S&P 500 hit correction territory – but averted a bear market – the index closed up 9.5% on average.
Since WWII, 12 of the 48 corrections turned into a bear market – 25% of the time.
Of the 15 corrections we’ve had since 2008, the stock market was higher one year later every time but two instances. The average gain is 15% one year later.
The average loss during a correction is about 13%.
After the pullback and a strong earnings outlook, the S&P 500 trades with a forward price-to-earnings ratio of 18 – below the five-year average of 19.
From almost any angle you look at, holding – or even buying – stocks during a correction is a solid long-term strategy.
Sure, there’s a chance the current pullback could turn into a bear market. But the odds are it will stay in correction territory.
Either way, I’m starting to see some attractive buying opportunities in companies I want to own for the next five-plus years.
Now is the time to get your own watch lists ready. Pullbacks have become faster and more violent in recent years… which means the bounce-back can happen fast.
So keep monitoring the recent action… and stay on your toes.
Here’s to the future,
Matt McCallEditor, Market Insights
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