The recent shakeout in tech stocks has lent downward pressure to the major market indices to start the month of September. The increased volatility that has accompanied the sell-off has many investors anxious as to how long the current downslide will last and how deep it will extend. Important to remember is just how common drawdowns are. In fact, the S&P 500 has spent 64% of its time since 1900 in a drawdown of up to 5%, more than half of its time in drawdowns of up to 10% and more than a quarter of its time in drawdowns of up to 20%. That is a significant amount of time that the market spends pulling back from recently created highs and “correcting” itself. While it is impossible to predict exactly how far markets will fall and how long it may take them to recover, the process itself is something quite normal and very much essential to markets efficiently moving forward over time.
