After feeling some recovery related relief after the market bottom in March, 2009, the bumpy last few months are making some investors nervous. Such recovery related dips, however, are not inconsistent with previous strong markets. There have been 11 bull markets since 1945, and during those markets there was a correction of 10% on average, in the 11th month of those recovery markets (this recent correction occurred in the 14th month). The average historical decline in such cases was approximately 13%.
It is normal for the speed of a recovery to slow down and be bumpy. Over the past several quarters in our Quarterly Context webinars, we showed a graph of and explained that we expect a bumpy or “squiggly square-root symbol” shaped recovery and the markets and economy are playing out that way. We encourage you to attend the Quarterly Context webinars which include an economic and market overview as well as topics such as investor behavior patterns and issues, as well as investor pitfalls and how to avoid them. Clients indicate that they feel more comfortable when they are better informed through these sessions.