Stock Market Declines

Stock Market Declines

Stock market declines produce fear and anxiety. Making matters worse, the news media often reports market declines in an overly dramatic fashion. For the long-term investor, it is vitally important that one doesn’t panic. Knowing how the market has behaved in the past can help investors keep their cool when everyone else is worked up in a frenzy.

In order to talk about the historical data, it’s important to define some terms. Market declines can be categorized based on their severity. These are arbitrary ranges and labels, but they will aid our analysis.

Using these terms, let’s look at all historical declines from 1928 – 2016 that are greater than 1.0%. We can glean some very useful information from this data.

The Bad News

The Good News