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Just over 12 months after the bottom of the Covid Correction, the S&P 500 doubled in value.
But during the heat of a correction, it can be almost impossible to stay cool and collected.
There have been 27 corrections in the S&P 500 since World War II, with an average decline in the index of about 14%.
Wall Street pros call a drop of 10% to 20% a correction, and typically refer to anything worse than that as a crash or a bear market.
During the dark days of the Great Recession of 2007 to 2009, investors lost more than half their money as the housing bubble burst and global markets melted down.
Investors who suffered through the worst of the Great Recession did have to be patient to get their money back—but if they held on, they got it back.
“Once a correction happens, limit your exposure to news about it and avoid checking your balances,” says Weston.
You’ve read the blogs, perhaps worked with a professional, and you’ve made the best decisions you could.
There’s no reason you can’t reevaluate your old choices based on new information during a stock market correction.
Never let a crisis go to waste, and a market downturn could be an occasion to reexamine and adjust your plans.
The thing about stock market corrections is that you never know when they might turn around—and studies show that missing out on a big market turnaround can be a portfolio killer.
Research from J.P Morgan finds that investors who missed the top 10 trading days during a recent 20-year stretch would’ve seen their returns fall by almost half, compared to those who stayed invested the whole time.
Or was it luck? Trying to squeeze every last dollar out of investments right before you need the money—to retire, to buy a home, to pay for college—is a losing proposition.
They should slowly be exchanging risky investments for safe ones when it makes sense, well before retirement.
Like portfolio balancing, a stock market correction could be the right time to re-evaluate your retirement plan.
Now is the time to take all that regret and turn it into something useful.
Bob Sullivan is a Peabody-award winning journalist and the author of five books, including New York Times Best-Sellers, Gotcha Capitalism and Stop Getting Ripped Off! He spent nearly two decades working at MSNBC.com and NBC News, and he still appears on TODAY, NBC Nightly News, and CNBC.
Ben is the Retirement and Investing Editor for Forbes Advisor.