Part 3/9:
The Nature of Market Corrections: Normal and Temporary
The speaker emphasizes that such declines are typical and part of the natural ebb and flow of markets. Historically, markets experience:
Multiple 5% declines each year, averaging around three per year.
Occasional drops of 10% or more, occurring roughly once annually.
Larger corrections of 15% or more approximately every couple of years.
Severe crashes, such as the dotcom bubble and 2008 financial crisis, with declines of 50-70%.
Despite these fluctuations, markets have always recovered over the long term. This resilience is vital to remember when facing short-term setbacks.