Pullbacks Are the Admission Fee to Long-Term Returns
Frequency of 5%, 10%, 15%, and 20% drawdowns per decade
The S&P 500 experiences a 5% pullback ~3x/year, a 10% correction ~1x/year, a 15% drop every ~2 years, and a 20% bear market every ~5-7 years. These frequencies have been remarkably stable across decades.
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ALAN GLOBAL INTELLIGENCE · alanglobalintelligence.comSource: S&P 500 daily closes · static refresh cadence
What history says
Editorial commentary written by ALAN analysts. Figures cited below are analyst-authored context — they are not derived from the chart above and may reflect different windows or sources.
Set expectations BEFORE the decline
Clients who know in advance that 1-2 corrections per year are normal are far less likely to panic when one occurs. Surprise amplifies behavioral error.
The intra-year drawdown chart is the most powerful expectation-setter
Show clients that the average year has a -14% intra-year drawdown yet ends positive 73% of the time. The drawdown IS the year, not an exception to it.
Higher-frequency drawdowns are meaningless noise
A 5% pullback that recovers in 3 weeks is not an investable event. Only 10%+ corrections that persist for months are worth discussing or acting upon.
For your portfolio
Pre-agree with yourself or your advisor on which drawdown depths trigger action — nothing at -5%, a rebalance check at -10%, a full plan review at -20% — so that codifying these known frequencies in advance converts each decline from an alarm into a checklist item.
For information and research only. Not investment advice. ALAN does not place trades or execute orders. Figures come from the sources shown and can lag the market; verify independently before making decisions. Past performance is not predictive of future results.
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ALAN is not a broker-dealer or investment advisor. All data is informational only and does not constitute investment advice. Past performance does not guarantee future results.