Investors who can ride out the current market storm may be handsomely rewarded further down the road, according to data from LPL Financial. The S & P 500 on Tuesday entered correction territory, finishing the day down more than 10% from a record close set earlier this year. That marks the 33 rd time the broader-market index has fallen into correction or bear market territory since 1980, LPL Financial's Ryan Detrick pointed out in a tweet . A correction entails a drop of at least 10% from a recent high; a bear market consists of a 20% plunge or more. However, investors may want to hold off on selling more stocks — or even buy this dip — if history is any indication. LPL's Detrick noted that the S & P 500 has averaged a staggering 24.8% return one year after falling into a correction or a bear market. The S & P 500 is also higher 90.3% of the time a year after a correction starts. Over a two-year period, the S & P 500 has been higher 86.7% of the time after sliding into a correction, averaging a 37.4% return off those lows. Stocks have struggled to start the year, as worries over tighter Federal Reserve monetary policy and the escalating tensions between Russia and Ukraine have weighed on market sentiment. For the year, the S & P 500 is down nearly 10%. "There are clearly still risks, but with the SPX at/near the Jan lows … and the worst-case scenarios avoided in Ukraine (for now), the risk/reward for US equities is skewed higher," wrote Adam Crisafulli of Vital Knowledge.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, January 24, 2022.
Brendan McDermid | Reuters
Investors who can ride out the current market storm may be handsomely rewarded further down the road, according to data from LPL Financial.