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When to Expect a Market Decline (It’s Sooner Than You Think!)

Market declines like we have experienced in October may be more common than you think. Here are the surprising statistics on the frequency and magnitude of market declines against the backdrop of strong long-term returns for stocks:

  • 5% “dips” occur every 3-4 months, on average.
  • 10% “corrections” tend to occur once every 11 months.
  • A 20% decline, or “bear market,” occurs every three to four years, on average. 
  • The typical market correction in the absence of a recession is 13%.
  • 70% of corrections since World War II did not lead to a bear market.
  • Bear markets that occur in the absence of a recession are rare, but have occurred.

In short, periodic declines -- whatever the reason -- are a normal and expected part of investing, and something that long-term investors should take in stride.

DISCLAIMER: Past performance does not predict future results. This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.
Hefren-Tillotson Inc. is a leading diversified financial services firm providing investment and retirement plan management and comprehensive, financial planning through MASTERPLAN® for individuals and businesses. The firm’s wealth management services are administered by Certified Financial Planner (CFP) professionals, Chartered Financial Analyst (CFA) Charter holders, attorneys, Chartered Life Underwriters, and CPA/PFS’s. Hefren-Tillotson offers corporate services including 401(k) retirement planning, executive financial counseling, fiduciary reviews and workplace financial planning seminars. Founded in 1948, the firm is headquartered in Pittsburgh and has offices located in Pittsburgh, Butler, Greensburg, North Hills, and South Hills. MEMBER SIPC.