ROUGH SAILING FOR STOCK INVESTORS

Volatility isn’t going away any time soon, but a correction could create buying opportunities.

- ANNE KATES SMITH

INVESTORS CAN BE FORGIVEN for feeling seasick. Since hitting record highs in late 2021 and earlier this year, major market indexes have been mostly sinking, with small-company stocks and tech shares faring the worst. The market has endured waves of volatility as investors try to balance strong corporate fundamentals against the fear of monetary tightening as the Federal Reserve attempts to contain inflation.

From its high on January 3, the S&P 500 fell 9.8% through January 27— technically, just shy of an official correction, considered a 10% drop. The broad market measure tripped the 10% mark intraday, however. It’s not clear whether the market has found a floor. History shows that corrections in volatile election years—as this one promises to be—are often steeper than 10%. But absent a recession, corrections tend to be good buying opportunities. However it plays out, the current unpleasantness is a reminder that stock market corrections are a fact of investing life. The time between corrections of 10%-plus in the S&P 500 is 410 days, on average, according to investment research firm CFRA. As of February 4, we’d gone 635 days without one.