How often are pullbacks ir stock market?

Pullbacks in the stock market are a common occurrence and can be expected to happen periodically. Here's a detailed analysis to illustrate this:

1. Frequency of Pullbacks: Historically, pullbacks of 10% or more have occurred on average once every 1.7 years, with 53 such pullbacks happening in the past 90 years. This indicates that pullbacks are a regular feature of the market's performance.
2. Depth and Duration of Pullbacks: The average calendar-year stock market pullback since 1995 has been -14.3%, with some pullbacks exceeding 20%. The duration of these pullbacks can vary, but they often last for several months.
3. Recovery from Pullbacks: Following a pullback, the market tends to rebound, with the S&P 500 experiencing an average increase of over 8% one month after the bottom is reached and over 24% one year later. This suggests that while pullbacks can be painful, they often present opportunities for investors to buy at more attractive valuations.
4. Comparison with Corrections and Crashes: While pullbacks are less severe than crashes or bear markets, they still represent a significant downturn in the market. The average drawdown from peak-to-trough in a given year is -16.3%, and double-digit corrections occur in about two-thirds of the time.
5. Market Volatility and Pullbacks: Recent market volatility, including pullbacks and corrections, is not unusual and can be attributed to a combination of factors such as inflation concerns, Fed rate hikes, and geopolitical tensions. These events can create uncertainty in the market, leading to increased volatility and pullbacks.

In conclusion, pullbacks in the stock market are a regular occurrence, with historical data suggesting that they happen on average once every 1.7 years. While they can be significant and uncomfortable periods for investors, they are often followed by market rebounds. Understanding the nature and frequency of pullbacks can help investors maintain a long-term perspective and make informed decisions during times of market turbulence.