This big selloff is what stock market investing is all about 📉🤮
Short-term volatility and long-term gains 📈🤑
As of Monday’s closing price of 4,296, the S&P 500 is down 11% from its January 4 high of 4,818.
For context, the S&P has seen an average annual max drawdown (i.e., the biggest intra-year sell-off) of 14% since 1950. In other words, big stomach-churning sell-offs are typical, and the one we’re currently experiencing is just below the historical average.
This all speaks to two conflicting realities investors must cope with: In the long run, things almost always work out for the better, but in the short run, anything and everything can go wrong.
Accepting that the market can be volatile is what investing is all about. It’s the price investors pay for long-term riches.
It also means fighting the temptation to sell at what may be precisely the wrong time.