At the moment, the S&P 500 has declined as much as 4% from its previous peak. It’s important to keep this in perspective since the stock market naturally experiences swings on a regular basis. How we react to temporary declines can have a big impact on long-term financial success.
Here are some key facts to keep in mind:
- History shows that pullbacks are completely normal. The S&P 500 has experienced an average of 4.6 pullbacks of 5% or more per year since 1980, yet the market has delivered positive annual returns in the majority of years. For example, in 2025 the S&P 500 returned 18% for the full year even though it fell around 19% immediately after the April tariff announcement.
- Some investors may be tempted to try to time the market around pullbacks. The challenge is that positive days tend to occur soon after negative days, making it very hard to time things perfectly. History shows that staying invested over these periods would often have been the better approach.
- On the flip side, waiting for a big pullback before investing can be costly as well. Based on data since 1927, waiting for a single-day decline of -5% means sitting on the sidelines an average of 303 days while missing an average return of 13.8%.
The included chart shows the effect of trying to time the market. Missing even a few of the best market days would have been counterproductive.
Ultimately, pullbacks are a natural part of investing, and maintaining a long-term perspective, rather than reacting to short-term market moves, has historically been the most effective approach to building wealth over time.
Disclosure:
Advisors associated with Spartan Wealth Management may be either (1) registered representatives with, and securities offered through LPL Financial, Member FINRA/SIPC, and investment advisor representatives of Spartan Wealth Management; or (2) solely investment advisor representatives of Spartan Wealth Management, and not affiliated with LPL Financial. Investment advice offered through Spartan Wealth Management, a registered investment advisor and separate entity from LPL Financial.
Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Spartan Wealth’s website and its associated links offer news, commentary, and generalized research, not personalized investment advice. Nothing on this website should be interpreted to state or imply that past performance is an indication of future performance. All investments involve risk and unless otherwise stated, are not guaranteed. Be sure to consult with a tax professional before implementing any investment strategy. Investment Advisory Services offered through Spartan Wealth Management, a Registered Investment Advisor. Registration does not constitute an endorsement by the SEC nor does it imply a certain level of skill or training.
The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via www.clearnomics.com or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company’s stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security–including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.
