The Pitch

What a surprise, financial media are freaking out again. There’s a high probability we’ll officially enter “correction territory” in the next few days or weeks. A correction means the market closes 10% below its previous high. Finance loves euphemisms, and “correction” is one of the worst.

Corrections are normal, though. On average, the S&P 500 drops nearly 15% at some point each year. Could this be one of those times? Yes. Could it be worse? Maybe. Could it recover tomorrow? Maybe. Nobody knows, and nobody should care.

What we’re going through the price of admission for the long-term returns we projected when we started working together. If you can’t handle a 15% drop, the stock market might not be for you.

What to do? Here’s the pitch: either do nothing or invest even more.

• If you’re in the accumulation phase, keep doing what you’re doing. If you can, increase your savings rate.
• If you’re retired and drawing income, this is why you have a war chest of low-risk and no-risk assets set aside.

Your investments are just a part of your financial plan, and nowhere in your plan is there a section about reacting to the news.

This will pass, like everything else.*

*Here’s a short list of past “crises” that triggered corrections, or at least came close: U.S. debt ceiling showdowns, the inflation panic of 2022, Silicon Valley Bank and regional bank failures, the tech stock collapse, China’s real estate meltdown (remember Evergrande? Of course you don’t), U.S. credit rating downgrades in 2011 and 2023, Brexit, Eurozone debt crises, Covid, geopolitics (Russia-Ukraine, the Middle East), and the most recurring “crisis” of all—U.S. politics.