When the market drops, some investors lose perspective that downtrends and uptrends are part of the investing cycle. When stock prices break lower, it's a good time to review common terms that are used to describe the market's downward momentum.
A pullback represents the mildest form of a selloff in the markets. You might hear an investor or trader refer to a dip of 5-10% after a peak as a “pullback.”1
The next degree in severity is a “correction.” If a market or markets retreat 10% to 20% after a peak, you’re in correction territory. At this point, you’re likely on guard for the next tier.2
In a Bear Market, the decline is 20% or more since the last peak.2
“Pullbacks, corrections, and bear markets are a part of the investing cycle.”
When stock prices are trending lower, some investors can second-guess their risk tolerance. But periods of market volatility can be the worst times to consider portfolio decisions.
Pullbacks and corrections are relatively common and represent something that any investor may see from time to time in their financial life, often several times over the course of a decade. Bear markets are much rarer. In fact, between April 1947 and September 2021, there have only been 14 bear markets.3
A retirement strategy formed with a financial professional has market volatility factored in. As you continue your relationship with that professional, they will also be at your side to make any adjustments and help you make any necessary decisions along the way. Their goal is to help you pursue your goals.
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In almost every journal entry I write, I include, “I am grateful for…” and list three to four items from my day that reminded me of how grateful I am. Just last night my wife of 10 years, laughed out at loud as she noticed, I had written, “Popcorn” as I enjoyed a bag in the last minutes of the evening after putting our young boys to bed. It is the little things that make life grand, right?
In light of the deep gratitude I experience on a daily basis, here are 8 financial planning action items I’m grateful for. I know my clients feel the same way because of the significant impact these ideas have over time:
I am grateful because these plans create structure and commitment.
I am grateful to help align risk, time frames, performance, and cost with the fund options available.
I am grateful because we are in a historically low tax environment and Uncle Sam has already been paid.
I am grateful to help eliminate inefficiencies and “leaking out the back door” with surplus cash flow.
I am grateful for financial reassurance.
I am grateful when I can provide clarity to planning so that my clients know what they are actually saving for.
I am grateful when a client calls asking about a refinance option, a car purchase, or stock options. Even though I don’t directly manage these decisions, they do have an impact on your financial plan.
I am grateful when clients can save and grow their money, yet still have access to their funds for that next down payment, big trip, or redoing the kitchen.
Yes, I am grateful for buttery popcorn, but more importantly, I am grateful for the motivation and trust of my clients and business partners.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine what is appropriate for you, consult a qualified professional.
