Market declines are like speeding tickets – they are a reminder that there is always risk with investing and help to curb excesses! Bull markets without normal pullbacks can lead to a false sense of self-confidence, a disregard to fundamentals and valuation which can lead to speculation….a focus only on the upside potential and not the downside risk.
Just the same way, speed limits are set for a reason, both on the highway and around your neighborhood. While we all may have good intentions of being aware, human nature can become complacent – focusing on the destination (the reward) without paying attention to the surroundings.
Market volatility and pullbacks are problems for the speculator, but not the investor. The investor doesn’t need to react to market volatility as they should already have appropriate plans in place for income and cash needs.
So the next time there’s a market pullback, remember that this is the market “policing” itself……the fine (and maybe points) might sting a bit in the short term, but it’s a necessary, healthy process for growth!