Welcome to how investing in the stock market works.
In order to watch movies, documentaries, and shows on Netflix you pay a subscription fee. In order to reap the benefits of investment return in the stock market, you pay the subscription fee of volatility.
The S&P 500—the index of the largest stocks in America—is currently off around 9%.
Whether or not there was a conflict in Iran, you should expect the possibility of a dip like this every single year.
In fact, you should plan for worse.
Your assumption should be that the stock market may go down around 14% every year.
This should not seem unusual. It should seem normal.
Sure, it may not go down that much at all in any given year or it could fall even further. After all, averages are simply a conglomeration of various outcomes.
But 14%, since 1980, according to JPMorgan, is the average, which is a useful metric—though not a perfect one—in setting investor expectations.1
The researchers give us the bad news, like no ice in a shot of whiskey, neat: “Despite average intra-year drops of 14.2%…” before they hit us with the good news “…annual returns were positive in 35 of 46 years.”
Just in case you’re not getting it…
Let’s go out further to 1950, with the help of Exhibit A, and make the visualization more compelling by showing the S&P 500 price in the green line on its upward trajectory and all the 5% drawdowns in yellow and 20% bear market declines in red along the way.
What’s the takeaway?
Two things: 1) declines are normal, and 2) they have happened on the way up.
Look at that green line.
That’s what keeps us going.
You do not get the magic of compounding investment return without the malaise of regular declines.
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Sources:
- “Guide to the Markets”, p. 16 (February 26, 2026). Accessed online.