by Dan Zalipski, CFA
It goes without saying that the recent volatility has been unsettling as investors have watched 2018 gains evaporate amid the turmoil. It’s times like these where we must remind ourselves that corrections are a routine occurrence and not necessarily a sign of an imminent prolonged downturn. Corrections, defined as a 10% drop from the most recent peak occur on average once a year. Smaller market declines between 5-10% are even more frequent averaging about four per year. Compared to recessions, they are relatively short in duration, but can still linger for several months. Trying to time moves within a portfolio in anticipation of a correction is difficult due to their frequency and somewhat unpredictable nature. Coming out of a correction, however, is a prudent time to assess the correction’s impact on a portfolio and rebalance appropriately.