This Pullback May Be a Rare Opportunity

It has been a difficult week in the stock market, led mainly by technology and other fast-growing companies. After a long stretch of strong returns, even a normal decline can feel more serious than it actually is. When we look closely at what’s driving this pullback, the picture is far less alarming than the headlines suggest.

Why stocks are falling right now

This decline is not being caused by a financial crisis, a banking failure, or a collapsing economy.
Instead, it is coming from three familiar forces that appear regularly during long-term bull markets.

First, expectations were extremely high.
​ We are in the middle of earnings season, and many companies are still reporting solid profits. However, when investors expect near-perfect results, even good news can disappoint if future guidance is slightly weaker than hoped.
Historically, markets react more to changes in expectations than to the absolute level of earnings.

Second, technology stocks rose very quickly.
​ Excitement around artificial intelligence and productivity-enhancing innovation pushed valuations higher over the past year. After strong rallies like this, pullbacks are common.
Over the last several decades, the S&P 500 has experienced an average intra-year decline of roughly 14%, even in years that ultimately finished positive.¹

Third, investors are taking profits and rebalancing.
​ Professional investors routinely trim positions after strong gains to manage risk. This creates short-term selling pressure even when the long-term outlook for the economy and corporate earnings remains healthy.

None of these forces signal a broken market. They are normal features of how markets function.

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We have seen this many times before

Pullbacks driven by high expectations, technology volatility, and investor repositioning are not rare.
They are a recurring pattern inside long-term market growth.

Early 2010s: volatility after the financial crisis

Between 2010 and 2012, the S&P 500 experienced several drops between 10% and 19%.
Yet from the 2009 market bottom through the end of the following decade, the index delivered a total return exceeding 400%, including dividends.²
Investors who added money during those pullbacks were rewarded dramatically.

2018: interest-rate fears

In late 2018, concerns about Federal Reserve rate hikes pushed the market down nearly 20% in just a few months.
Within one year, the S&P 500 had fully recovered, and five years later it was roughly 70% higher than the 2018 lows.²

2020: the pandemic crash

During the early months of COVID-19, the S&P 500 fell about 34% in just over a month, one of the fastest declines in history.
Despite the uncertainty, the market recovered to new highs within five months, and from the March 2020 bottom through the end of 2021 the index gained more than 100%.²

2022: inflation and rapid rate hikes

Rising inflation and aggressive interest-rate increases led to another decline of roughly 25%.
By late 2023, the market had largely recovered, again demonstrating how temporary even significant downturns can be.²

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The long-term pattern is consistent

Across decades of data, one lesson keeps repeating:

Short-term declines are normal, and long-term growth has been persistent.

Since 1926, U.S. stocks have produced average annual returns of about 10% per year, despite wars, recessions, inflation shocks, and financial crises.³ and the market has finished positive the majority of calendar years over a long history.⁴ Missing just the 10 best days in the market over long periods can cut total returns by more than half, and many of those best days occur during or immediately after downturns.⁵ This helps explain why staying invested during volatility has historically mattered more than trying to time the perfect entry.

Opportunities feel uncomfortable

One of the quiet truths of investing is that attractive prices almost never arrive alongside reassuring news. When valuations are compelling deadlines tend to be negative, confidence is usually low and waiting feels safer than acting.
That discomfort is not accidental. It is often the entry price for long-term returns.

If buying felt easy, prices would not be attractive in the first place.

The quieter reality of building wealth

Most long-term wealth in the stock market has not been created during moments of excitement or record highs.
Instead, it has often been built during periods of uncertainty, when disciplined investors kept investing even though it felt uncomfortable.

Over time, markets have rewarded patience, consistency, and time spent invested.
If history is a guide, the moments that feel most uncertain in the present are often the ones that matter most for future returns.

And that is why pullbacks, while never pleasant, have so often turned out to be rare opportunities in disguise.

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Thank you for reading. If you need help navigating choppy waters for your portfolio, we encourage you to apply to be a client and learn more about our firm here.

Sources

1. S&P 500 intra-year declines average roughly 13–14%, yet markets often finish the year positive — data from LPL Research, Jackson, and related market studies.
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2. Historical S&P 500 drawdowns and recoveries across major events (2009–2023) compiled from long-term index return data and market history research.
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3. U.S. stock market ~10% average annual return since 1926 — Dimensional Fund Advisors and related long-term datasets.
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4. Majority of calendar years ending positive and long-term probability improving over longer holding periods.
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5. Missing the market’s 10 best days dramatically reduces long-term returns, with many best days occurring during downturns — Hartford Funds research.

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