According to Bloomberg, the recent market pullback is being characterized as a textbook correction after months of low volatility in 2024. As demand for haven assets waned globally, the Federal Reserve's primary concern remains systemic risk in financial markets rather than the disappointment of investors. A semblance of calm has returned to the markets, despite the sharp declines in equity prices being concerning.

Historic data shows that dips, pullbacks, and corrections of 10% or more are a normal and healthy part of any bull market. Roughly 94% of the years since 1928 have experienced a pullback of at least 5%, and 64% of years have had at least one 10% correction. This historical context should provide comfort to equity investors, encouraging them to be patient, stay invested, and avoid panic.

There have been 354 days since 1928 when the S&P 500 was down 3% or more, and the average three-month, six-month, and one-year forward returns are all higher than long-term averages. Excesses are burned off during these periods, which, although uncomfortable, are a healthy part of the market process. Long-term investors are advised to get used to the volatility and not worry about short-term market gyrations. Occasional market washouts are seen as beneficial, keeping investors honest and grounded.