Normal volatility

Peter Mallouk of Creative Planning shared an interesting reminder of what equity investing actually looks like over time.

Since 1950, the S&P 500 has suffered an average intra-year drawdown of 13.6%. Yet over the same period, the average annual return was +11.7%. In many years, investors had to live through corrections of 10%, 15% or even 20% before ultimately finishing the year with a positive return.

2026 is no exception so far: the S&P 500 has experienced a maximum drawdown of 9.1%, while still showing a total return of +13.7% as of 4 September.

The lesson is simple but important. Volatility is not an anomaly of equity markets; it is the price investors pay for their long-term return. Trying to avoid every correction usually means running the risk of missing a substantial part of the upside as well.

A drawdown during the year tells us surprisingly little about where the market will finish the year.

Disclaimer: This communication is provided for information purposes only and does not constitute investment advice or a recommendation to buy or sell any financial instrument. Past performance is not indicative of future results.