So far, 2014 has been a volatile year for the stock market. The S&P 500 has gone from its all-time high of 1,850 on January 15 to a low of 1,737 on Wednesday. This is a brutal 6.1% intra-year decline. For the year, the S&P 500 is no down 5.2%. However, these big intra-year drops are very typical of the markets.
Check out this chart from JP Morgan Funds’ David Kelly. According to Kelly’s research, the average annual intra-year drop since 1980 is a whopping 14.4%. This makes this year’s sell-off look minuscule. More importantly, annual returns during these years have been positive 26 out of 34 times. Yes, the recent volatility hurts. But it’s no reason to freak out.