The stock market has been in a bull run for the past decade, but there have been some recent pullbacks. While market corrections can cause panic, they can also be seen as healthy. It is important to view recent market pullbacks in the context of the overall market to remain focused on the long term.
Mid-March witnessed a fall of 772 points in the Dow Jones Industrial Average. This was especially concerning considering the fact that the market had been continually rising since 2009. Investor confidence took a hit, but many market professionals view pullbacks and corrections as a healthy part of the market cycle.
Pullbacks create room for the market to re-adjust, and provide buying opportunities for investors who are willing to take a longer-term view. They also offer the chance for investors to review and re-evaluate stocks that were strong performers before the market decline.
In addition, pullbacks offer investors an opportunity to rebalance their portfolios. Rebalancing forces investors to sell over-performing stocks and re-allocate their capital to investments with more reasonable valuations. This can help investors make better return decisions on their investments.
The coronavirus crisis has exacerbated market volatility, and it is uncertain when the market will return to its pre-coronavirus levels. Market volatility should not be viewed as a negative; instead, it should be viewed as an opportunity. Despite the market decline, long term investors should remain focused on the big picture and understand that the stock market can rise and fall in the short term, but overtime it tends to move in an upwards direction.
Recent market pullbacks should not be viewed as a sign of impending doom. Instead, investors should take a long-term view and consider the pullbacks as an opportunity to review and rebalance their portfolios. By doing so, investors are ensuring that their portfolios are managed properly and prudently, allowing them to take advantage of growth opportunities in the future.