Market Corrections and Recoveries (chart)

Click on above thumbnail for to see full chart.

Key Takeaways:

• This chart shows the two dozen stock market corrections since World War II.
• The average correction sees the market fall -14.3% from peak to trough, taking 5 months.
• Recoveries can occur swiftly, taking only 4 months on average. 
• Staying invested helps investors to not miss market rebounds.

Methodology:

• This chart shows every S&P 500 correction since World War II. 
• Market corrections are defined as declines beyond 10% but less than 20% from the previous all time high. 
• Declines of 20% or more are considered bear markets. 
• The market bottom is reindexed to 100 and the x-axis measures days before and after the market bottom.

Date Range: January 1950 to present

Source: Clearnomics, Standard & Poor's

Timeless Investment Wisdom for Uncertain Times

While I don’t know what’s going to happen in the stock market tomorrow, I do know it is rarely a good idea to sell into panic. In my 35+ years managing money, I cannot recall a single time when a client who made a panicked decision to sell stocks was later glad they did.

Whenever the market has a significant decline, and I find myself worried that it will fall further, I go to my Timeless Investment Wisdom library to reread the many quotes I’ve saved over the years and continue to add to. Below are a few that seem appropriate given last week’s market decline, in which the S&P was down ~9%. It is my sincerest hope that these words of wisdom will help calm you, give you perspective, and protect you from making a decision you might later regret.  

The Crowd is Usually Wrong

When all the experts and forecasts agree, something else is going to happen. My whole experience on the economy has been, if the majority of economists agreed on something, I knew I had to watch for something different. – Bob Farrell, former Merrill Lynch Chief Market Analyst

The Folly of Predictions

I’ve never seen anyone consistently and accurately predict what the economy or stock market is going to do. No one. Not warren Buffett. Not Elon Musk. Not my friend [former Fidelity mutual fund manager] Peter Lynch. Certainly not me. – Ron Baron, American investor and founder of Baron Capital 

Crises Precede Opportunities

Out of crisis comes opportunity. You make most of your money in a bear market. You just don't know it at the time. – Shelby Davis, American investor, philanthropist, and founder of Davis Advisors

Patience

The stock market is a device for transferring money from the impatient to the patient. – Warren Buffett, American investor, philanthropist, and CEO of Berkshire Hathaway

Gratefully,

Sean Gross, AIF®, CFP® | Co-Founder & CEO

Guide to Tariffs - How tariffs impact the economy, markets and investors

As a follow-up to the article we posted earlier today, we are sharing the following resource from our friends at The Capital Group: Guide to Tariffs - How tariffs impact the economy, markets and investors

Special Update: Tariffs and Market Volatility

When all the experts and forecasts agree - something else is going to happen.1

Yesterday, President Trump announced new tariffs on nearly all major U.S. trading partners. These tariffs are “reciprocal,” on top of previously announced duties. These tariffs have had an immediately negative impact on the stock market and have caused a number economists to increase their recession probability forecasts.

Navigating Market Volatility: Staying Focused on Long-Term Success

These trade changes are an ongoing process, and it will take time to see their full effects. While stocks are volatile in this uncertain period, bonds are holding up, showing the power of diversification.

Investors have faced many challenges over history, including the pandemic, inflation fears, wars, recessions, bubbles, political turmoil, and technological disruptions. In every case, markets went on to new highs, even if it took some time.

Key Facts

To help cut through the noise, here are some of the biggest developments and issues from the tariff announcement:

• The immediate stock market reaction is negative, with the S&P 500 declining ~6% from 4/2/25 through ~10 AM on 4/3/25. Partially offsetting this, bonds have gone up, and the falling US dollar has helped international exposures.
• The newly announced tariff measures have been set at a minimum 10% rate, and the average tariff rate across countries is 25%, with rates for some countries as high as 49%. The level and scope are greater than many investors and economists expected.
• This all comes at a time when consumer and investor sentiment is low. Concerns currently include higher inflation and a possible recession, although uncertainty remains around policy implementation timelines and economic effects.
• At a company level, some U.S. manufacturers might benefit from less foreign competition. Conversely, about 30% of large U.S. companies' sales come from overseas, so changes in trade rules could impact their business. Many companies are already adjusting their operations in response.
• Given limited visibility into trade policy outcomes, the Federal Reserve has maintained interest rates, viewing tariff effects as "transitory" one-time events. If needed, the Fed could step in to support markets.
• When it comes to asset allocation, diversification has helped investors so far in 2025. Various asset classes—including bonds, international stocks, and some alternative investments—have helped support balanced portfolios during this period of stock market volatility.
• Nobody really knows how the tariffs are going to affect long-term economic growth and market outcomes. News outlets sell headlines and economists make predictions; however, both have demonstrably poor track records. This phenomenon was humorously and ironically illustrated by a famous American economist who quipped, The stock market has called nine of the last five recessions2.

Key Takeaways and the Path Forward

If you can keep your head when all about you are losing theirs...if you can wait and not be tired by waiting...yours is the Earth and everything that's in it.3

These tariff announcements represent a major shift in trade policy. That said, successful investing isn't about reacting to headlines or trying to time market movements. Rather, it's about maintaining perspective and a flexible, well-diversified portfolio aligned with your long-term financial goals.

There are many reasons to believe markets and the economy can eventually move past the current set of concerns. It's important to recognize that this pattern falls within normal market behavior. Historically, markets have positive annual returns approximately two-thirds of the time and deliver negative annual returns only one-third of the time. Despite these occasional downturns, the stock market has demonstrated growth across decades and full market cycles.

“Keeping your head” and having the fortitude and discipline to stay invested—or, even to take advantage of more attractive valuations—is a key principle to long-term financial success.

As always, we're here to help you maintain perspective and make informed decisions about your financial future.

Gratefully,

Sean Gross, CFP®, AIF® | Co-Founder & CEO

Endnotes:

1 Bob Farrell, former Merrill Lynch Market Technician.

2 Paul Samuelson, Economist and the first American to win the Nobel Memorial Prize in Economic  
   Sciences.

3 Rudyard Kipling, from the poem, “If”.

Liberation Day Q1 Market Update

Market Environment Indicator (MEI)
MEI readings declined from last week, but the indicator remains Positive after improving from Neutral last week. The weight of the evidence suggests that the current decline is not expected to extend into a significant downtrend. If the MEI reverses to Negative, it would be a signal of more substantial problems ahead.

Liberation Day
The S&P 500 and Nasdaq have recently had some of their worst days since 2022. If you’re following the news headlines, you have likely seen that the explanation for recent market volatility and losses is due to the anticipation of President Trump’s “Liberation Day” tariffs announcement. By the time you read this, the tariffs will have been announced, and the U.S. market reaction will be seen in tomorrow’s (4/3) trading. Times like these can feel uneasy, so I wanted to write a brief note to share my perspective. I hope you find this helpful, but please always feel free to reach out with any questions.

Understanding Market Concerns
While tariffs have been front and center amid recent market volatility, other economic data is adding to market concerns. It’s important to note that slow growth is part of the business cycle and doesn’t necessarily mean the cycle is ending.

Here are some important perspectives:

• Recession Forecasts: In recent interviews, President Trump did not rule out the possibility of a recession. Some investors and economists have been worried about a recession for the past three years. Just a year ago, many believed an economic downturn would be imminent due to inflation. Despite these fears, the stock market has performed well over this period with the S&P 500 still up nearly 60% since the bottom in 2022, and 10% over the past year. It’s important to take these forecasts with a grain of salt.
• Economic Policy Changes: New tariff policies have created market turbulence, although historical evidence suggests their long-term economic impact may be less severe than initial market reactions indicate. For example, in 2018 the market fell as tariffs were implemented, but earnings growth was still strong, and GDP was almost 3% that year. Eventually, new trade deals were reached.
• Inflation Concerns: The Consumer Price Index rose above 3.0% for the first time since last summer but has fallen slightly since then. This affects both consumer sentiment and spending patterns. Inflation has been closely watched for several years as it is a key consideration for how the Federal Reserve directs interest rates. Elevated inflation will make it difficult for the central bank to cut interest rates if the economy begins to slow.
• Employment Changes: Recent federal government layoffs have caused some concern, with the latest employment data showing a decrease of 10,000 federal jobs, though this number is likely to rise in future reports. While federal workers account for less than 2% of the workforce, there is concern of ripple effects on the private sector and job growth overall. Overall job growth remains positive, with unemployment still near historic lows.
• Consumer Sentiment: Survey data shows increased pessimism about future financial conditions, with inflation expectations reaching levels not seen since 1995. While this could impact future spending, how consumers feel can change quickly as well.

Maintaining Perspective
The potential for some period of turbulence as trade policy takes shape can be challenging. However, the pro-growth policies that had excited markets last year are still on the table. For example, an extension of the Tax Cuts and Jobs Act (TCJA) is currently being considered by Congress and significant pro-growth regulatory changes are in progress.

Market declines are never pleasant, but they are a normal part of investing. History shows that staying invested through challenging periods has typically rewarded patient investors.

Looking Forward
While tariff and recession concerns have increased, it's crucial to remember that economic forecasts are often unreliable timing indicators for investment decisions. What’s more important is holding a flexible, well-constructed portfolio that can withstand all parts of the market cycle. Please be on the lookout for additional communications in the weeks ahead, including my next letter which will explain how our investment philosophy and strategy are specifically designed, and particularly well-suited, for uncertain market environments.

Ultimately, current market conditions may feel uncomfortable, however maintaining a long-term investment perspective is still the best approach to achieving your financial goals.

Gratefully,

Sean Gross, CFP®, AIF®
Co-Founder & CEO