As markets continued to tumble and the S&P 500 entered a correction Thursday, Peter Mallouk posted a multi-paragraph message on X, formerly Twitter, reminding investors that volatility is normal and that the stretch since the last big downturn was longer than usual.
"The current market pullback has been more traumatic for some than it has been historically," wrote Mallouk, Creative Planning's president and CEO.
"It’s been a very long time since our last correction. Far longer than normal. It’s easy to forget that volatility is not the exception. It’s the norm. A correction is a drop of 10% or more, and an average correction is 14%. These happen every 10-15 months. We haven’t had a correction since October, 2022. Memories are short, especially with investing," he said.
He also sought to provide reassurance about the magnitude of the selloff.
"While the percentage drop of a correction isn’t historically big, the ‘points’ the market drops is now very big given where the DOW sits," Mallouk wrote. "A normal correction would be a 6,500 point drop. Sounds super scary. Just a few years ago a similar percentage drop in the DOW would be a 3,500 point drop. Focus on percentages, not numbers."
Mallouk also suggested that the current political scenario has more people stressed about the stock market.
"The rhetoric and policies coming out of the Trump administration — whether one agrees with them or not — has many people more on edge. There’s a lot more sensitivity around political influence on markets. There are few things people are more sensitive to than politics and money. Mix them together and you get an emotional firestorm for some," he posted.
One X user responded: "For an investor the market is on sale."
"True," Mallouk responded. "And keep in mind could be even more on sale later. One never knows for certain."
In a separate post, Mallouk noted that the traditional 60% stock, 40% bond portfolio rallied strongly after equities and bonds both slid by double-digit percentages in 2022.
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