Part 5/9:
It's important to contextualize the current situation within potential future scenarios:
Market Correction: A period of decline defined as a drop of at least 10%. Corrections happen regularly, approximately every 16 months.
Bear Market: A more serious drop of at least 20%, typically occurring every 7 to 10 years. On average, bear markets lead to a 33% drop over about a year.
Market Collapse: An extreme event marked by a drop exceeding 40%. This is rare, with only three such instances recorded in the last century.
Investors must prepare for the possibility of deeper downturns and should recognize that market behavior often defies historical averages.