Correction

A correction is when a stock index drops between 10% and 20% from its recent high. If it falls past 20%, it’s reclassified as a bear market. Corrections are a routine part of how markets work, even though they rarely feel routine when you’re watching your portfolio shrink.

How often do they happen?

On average, corrections happen about once a year in the U.S. stock market. Some years you’ll get two. Other years, none. Most corrections don’t turn into full bear markets. They tend to last a few weeks to a few months, and then markets resume their upward trend.

Why they feel worse than they are

A 10% drop sounds manageable in theory. But when it’s happening in real time, headlines are alarming, your portfolio balance is dropping daily, and people around you are talking about pulling their money out. It’s easy to feel like something is seriously wrong.

Corrections are normal and expected. They’re the price you pay for the long-term returns that stocks provide. Markets don’t go up in a straight line, and periodic pullbacks are part of the deal.

A concrete example

Say your portfolio is worth $50,000 and the market drops 15%. Your balance falls to $42,500. That $7,500 decline looks painful, but corrections of this size have historically recovered within a few months. If you’d sold at the bottom and waited to feel confident again, you likely would have missed the rebound and locked in that loss.

What to do

For most investors, the best move during a correction is nothing. Trying to sell before it gets worse and buy back at the bottom sounds great in theory, but almost nobody does it consistently. If anything, corrections can be a good reminder that your portfolio should already be set up in a way that lets you ride through them without panicking.