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.
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.
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.
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.
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.
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.