The Most Important Chart in the World
Published: November 16, 2021
With the recent equity weakness, it is important to remember that pullbacks are normal, even in the strongest bull markets.
- The S&P 500 Index recently pulled back 5.2%, the first 5% pullback in nearly a full year.
- Although this feels uncomfortable, investors must remember this is actually perfectly normal.
- In fact, since 1980, the average year has seen a 14.2% peak-to-trough pullback.
- Digging in more, 21 of the past 41 years saw at least a 10% correction, with 12 of those 21 actually finishing higher.
- In other words, big pullbacks can happen, even in strong bull markets. Who can forget last year’s 34% bear market and move back to positive?
We consider the chart below to be one of the most important for investors to grasp and realize, pullbacks happen.
I trust you’ve found this review to be educational and informative.
Let me emphasize that it is my job to assist you. If you have any questions or would like to discuss any matters, please feel free to give me or any of my team members a call.
Christopher Cannon, MSAPM, CFP®, RICP®, AIF®
Managing Partner & Wealth Management Advisor
RICP conferred by The American College.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries and widely held by individuals and institutional investors.
The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index.
The Standard & Poor's 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
The Russell 2000 Index is an unmanaged index generally representative of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index.
The MSCIEM (Emerging Markets) Index is a free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of the emerging market countries of the Americas, Europe, the Middle East, Africa and Asia. The MSCIEM Index consists of the following emerging market country indices: Brazil, Chile, Colombia, Mexico, Peru, Czech Republic, Egypt, Greece, Hungary, Poland, Qatar, Russia, South Africa, Turkey, United Arab Emirates, China, India, Indonesia, Korea, Malaysia, Philippines, Taiwan, and Thailand.
The Bloomberg Barclays U.S. Aggregate Bond Index is an index of the U.S. investment-grade fixed-rate bond market, including both government and corporate bonds.
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