Market Volatility — Why Drops Are Normal (and Opportunity)
Stock markets drop 10%+ at least once every 2 years. 20%+ drops happen every 4-5 years. This is completely normal.
Historical Market Drops and Recoveries
| Event | Drop | Recovery Time | Next 5 Year Return |
|---|---|---|---|
| 2008 Financial Crisis | -57% | 4 years | +178% |
| 2020 COVID Crash | -34% | 5 months | +107% |
| 2022 Bear Market | -25% | 2 years | +45%* |
Every major crash was followed by a recovery that made new highs. Those who panic-sold locked in their losses. Those who kept investing bought at discount prices.
What to Do During a Crash
Do NOT sell. Continue your regular investments. If possible, invest more (you are buying on sale). Turn off financial news. Check your portfolio quarterly, not daily.