The financial markets have gotten off to a rocky start this year. What’s caused this volatility? And does it present opportunities for patient investors?
First of all, several factors are behind the market volatility, including the war in Ukraine, higher inflation, rising interest rates and the lingering effects of the COVID-19 pandemic.
However, while these factors may be specific to the recent market decline, volatility itself is a common feature of the investment environment. In fact, history shows that corrections of 10 percent or more happen about every year, and declines of 15 percent or more have happened every other year, on average. Furthermore, while 2022 has thus far been challenging for investors, it was preceded by a long period of strong markets, with the S&P 500 averaging more than a 20 percent return over the past three years.
