Correction.

In plain English

A correction is a stock market decline of 10% to 19.99% from a recent peak. It is less severe than a bear market (a 20% or greater drop) and more meaningful than the day-to-day noise of normal volatility. Corrections happen on average roughly once every two years in the S&P 500. Most resolve within a few months; a minority deepen into full bear markets.

01Why it matters

Corrections are routine, not crises. Treating one like a crisis (panic-selling, abandoning a plan) tends to lock in losses that would have recovered. The investor who stays put through a correction usually looks back a year later and sees the dip as a non-event in their long-term chart.

02The math, step by step

In early 2018, the S&P 500 fell about 10% from its January peak in a few weeks, qualifying as a correction. By that summer the index had fully recovered. A more painful case: late 2018 saw a 19.8% drawdown, technically still a correction (barely), that recovered within four months.

03What this is NOT