The most important chart in the world illustrates that pullbacks happen and are normal. “Volatility is the price of admission,” explained LPL Financial Chief Market Strategist Ryan Detrick. “Sure, we’d all prefer stocks go straight up forever, but that isn’t reality. Investors must learn to embrace and accept the eventual scares and bouts of volatility that are common even in the strongest bull markets.”
Since 1980, stocks experience a 14.2% peak-to-trough pullback on average during the year, putting the recent 5% pullback in perspective. Who could forget last year’s 34% bear market and move back to up 16% by the end of the year? In other words, big pullbacks can happen even in years that see outsized gains, which is why this chart is so important for investors.
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