Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
Blog Home
Bob Carey
Chief Market Strategist
X •  LinkedIn

  Some Perspective On Corrections And Bear Markets
Posted Under: Broader Stock Market
Supporting Image for Blog Post

View from the Observation Deck  

  1. Investors who committed capital to the stock market heading into September 2018 soon learned that it was not the most opportunistic time to buy in. It happens. 
  2. From 8/31/18-12/31/18 (see table above), the S&P 500 Index posted a total return of -13.03%, which qualifies as a correction. A correction is defined as a 10.00% to 19.99% price decline from the recent peak in a security or index. 
  3. Since World War II (excluding the 33.79% selloff from 2/19/20-3/23/20), the average decline in the S&P 500 Index spanning 26 corrections was 13.70%, according to CNBC. That is in line with the 13.03% drop in late 2018. 
  4. When you factor in last year's COVID-induced bear market on top of the correction in 2018, equity investors should be pleased with the 3-year performance results in the last column in the table above. A bear market is defined as a 20% or more price decline from the most recent peak. 
  5. The S&P 500 Index is currently trading slightly below its all-time high established on 9/2/21. Having said that, there are a multitude of articles and videos featuring pundits/analysts/podcasters predicting when the next correction will arrive. 
  6. Rest assured it will happen at some point. Just know that the benchmark S&P 500 Index has never failed to fully recover the losses sustained in any prior correction or bear market. 

This chart is for illustrative purposes only and not indicative of any actual investment. The illustration excludes the effects of taxes and brokerage commissions and other expenses incurred when investing. Investors cannot invest directly in an index. The S&P 500 Index is an unmanaged index of 500 stocks used to measure large-cap U.S. stock market performance. The S&P MidCap 400 Index is a capitalization-weighted index that tracks the mid-range sector of the U.S. stock market. The S&P SmallCap 600 Index is a capitalization-weighted index that tracks U.S. stocks with a small market capitalization. The NASDAQ 100 Index includes 100 of the largest domestic and non-financial companies listed on The NASDAQ Stock Market based on market capitalization. The MSCI BRIC Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of Brazil, Russia, India and China. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. The MSCI Europe Index is a free-float weighted index designed to measure the equity market performance of the developed markets in Europe. The MSCI Emerging Markets Latin America Index is a free-float weighted index that captures large and mid-cap representation across five emerging markets in Latin America. The MSCI World (ex U.S.) Index is a free-float weighted index designed to measure the equity market performance of developed markets. The U.S. Dollar Index (DXY) indicates the general international value of the dollar relative to a basket of major world currencies.

Download a PDF of this post, please click here
Posted on Thursday, September 9, 2021 @ 1:16 PM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
Market Commentary and Analysis
Market Commentary Video
Monthly Talking Points
Quarterly Newsletter
Market Observations
Subscribe To Receive Email

A Snapshot Of Top-Line Growth Projections
September 30, 1981
Many Investors Could Be Underweight U.S. Mid- & Small-Cap Stocks
A Global Snapshot Of Equity Returns Spanning The COVID-19 Pandemic
The Pace Of Growth In Bond Mutual Fund Assets
A Global Snapshot Of Government Bond Yields
Money Market Fund Assets Remain Elevated
Sector Performance Via Market Cap. (2020 Bear Market & New Bull Market)
A Snapshot of Growth vs. Value Investing
How The S&P 500’s Defensive-Oriented Sectors Have Fared
Skip Navigation Links.
Search by Topic
Skip Navigation Links.

The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.