Since 2016, the S&P 500 has experienced seven drawdowns of 10% or more from the most recent high, a reminder that meaningful selloffs are not rare anomalies, but a normal occurrence of equity markets.
In fact, zooming out over the last 50 years, history shows that double-digit corrections tend to occur about every 18 months. That context is critical, especially during moments like the current Iran conflict related market volatility. Often in these situations, short-term narratives can feel disproportionately important. They usually are not.
The post-2016 period is not about the presence of corrections, but their consistency
Looking back over the last 10 years, markets have repeatedly reacted sharply to macroeconomic uncertainty. In 2018, equities sold off sharply amid concerns over rising interest rates. That was followed by a steep decline in early 2020 as the pandemic took hold, shutting down the global economy. Much of 2022 was similarly challenging, with markets struggling under 40-year-high inflation and an aggressive Federal Reserve interest-rate-tightening cycle. Most recently, in 2025, markets experienced another double-digit sell-off following President Donald Trump’s implementation of broad global tariffs.
Despite very different catalysts, the pattern is the same: markets periodically reset, sentiment shifts, and investors are forced to reassess risk.
Market selloffs highlight an important truth: the cause of a correction often matters far less than the fact that corrections happen at all. Today’s headlines may focus on the current Iran conflict, but historically markets have reacted to wars, elections, government shutdowns, interest-rate policy shifts, and economic scares in broadly similar ways. Our research on past geopolitical events shows market declines are often short-lived, averaging only a few weeks, to a few months, before stabilizing.
The danger for investors is recency bias, overweighting the importance of the current situation simply because it is happening now
Recent news shows the S&P 500 down only mid-single digits since February 28th amid the Iran conflict, well within the range of a typical pullback and not yet even achieving the level a full correction. Yet emotionally, these periods can feel like the beginning of something far more severe. They usually are not.
History argues for a more measured perspective. Corrections are not only common but necessary. They help reset valuations, flush out excess speculation, and ultimately lay the groundwork for future gains. Data shows that markets have consistently recovered from past corrections, often delivering strong returns in the year following a 10% decline. Investors who react impulsively to short-term volatility risk missing those recoveries.
Another takeaway from “selloff” observations is that frequency does not imply fragility. The fact that we’ve seen multiple 10% declines (and three 20% declines) since 2016 does not mean the market is becoming more dangerous; it simply reflects the natural rhythm of an equity market that is determining prices, in real time, based on thousands of data-points.
2016 to 2025 encompasses one of the strongest bull markets in history, but drawdowns have been a recurring feature, not an exception
Ultimately, the lesson from these events is straightforward: volatility is the price of admission for long-term equity returns. While it is tempting to anchor on the latest geopolitical event or headline risk, the data suggests that today’s sell-off, like those before it, is part of a much larger and more predictable cycle. Staying focused on that broader pattern can help investors avoid overreacting to the moment and instead remain aligned with their long-term objectives.
WT Wealth Management Learning Spotlights are designed to inform, inspire, and encourage meaningful dialogue between our clients and advisory team. Our mission is to demystify complex economic and investment topics, offering clear, practical insights that connect financial theory to real-world decisions.
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