Let’s start with something simple but surprisingly important:
Market corrections are not supposed to feel comfortable.
They’re not supposed to feel routine. They’re not supposed to feel logical. They’re not supposed to feel manageable. They’re not supposed to feel like “just another normal thing.”
They’re supposed to feel unsettling.
If they didn’t, they wouldn’t work.
That might sound strange, but it’s true.
Why Corrections Exist at All
Markets don’t deliver long-term growth in straight lines. They deliver it through uneven progress, setbacks, recoveries, pauses, panics, rebounds, and long stretches of boredom punctuated by short bursts of drama.
Corrections — typically defined as declines of around 10% or more — are part of that process. They are not anomalies. They are features, not bugs.
Historically, corrections occur regularly. Sometimes annually. Sometimes more often. Sometimes less. But they occur because uncertainty exists, information is imperfect and inefficient, and prices constantly adjust to new realities — real or perceived.
If markets never declined, they wouldn’t compensate investors for taking risk. Stability and high returns rarely coexist. The discomfort is the tradeoff.
Why Corrections Feel Worse Than They Are
There’s a strange disconnect between how often corrections happen and how shocking they feel when they do.
Statistically, they’re common.
Emotionally, they feel rare.
That’s because:
- Losses hurt more than gains feel good
- Negative headlines are louder than positive ones
- Fear spreads faster than calm
- Short-term drops dominate attention
- Long-term charts are rarely in front of us
When markets decline, it doesn’t feel like “one of many normal downturns.” It feels like this one is different. It feels structural. It feels permanent. It feels dangerous. Rationale is an ugly voice sitting on our shoulders.
Every correction feels unprecedented — even though most of them are remarkably similar in pattern and recovery.
The Psychology of Drawdowns
Corrections tend to trigger three powerful emotional responses:
Loss Aversion:
We feel losses more acutely than gains. A 10% drop hurts more than a 10% rise feels good.
Recency Bias:
We overweight what just happened and assume it will continue. If markets are falling, we expect more falling. As a result, declines accelerate more quickly as more and more investors fear the big one.
Narrative Fallacy:
We search for explanations and a rationale that make the decline feel permanent or structural — even when the causes are temporary, cyclical, or unknowable. Worse, perhaps, we believe we “had a feeling” before it happened but failed to execute.
These biases don’t make us foolish. They make us human. Trust me when I say every financial advisor or portfolio manager feels this too. Maybe more so, as we often feel the fear of others as a weight. We don’t want to be wrong, either.
Why Corrections Feel Like Failure
One of the hardest emotional aspects of market declines is the sense that something has gone wrong — either in the market, in your portfolio, or in your decisions.
People often think:
“Maybe I shouldn’t have invested at all.”
“Maybe this strategy doesn’t work.”
“Maybe this time is different.”
“Maybe I made a mistake.”
“I’m getting out to avoid that same mistake again.”
But most of the time, corrections are not evidence that anything is broken. They’re evidence that markets are functioning normally.
Discomfort is not proof of error.
The Hidden Danger of Corrections
The biggest danger of market corrections isn’t the decline itself.
It’s the behavior they provoke.
Corrections tempt people to:
- Sell during periods of peak fear
- Abandon long-term strategies
- Delay reinvestment
- Shift risk profiles at exactly the wrong time
- Turn temporary declines into permanent losses
Historically, the largest long-term damage occurs not during market downturns — but during emotionally-driven reactions to those downturns.
Markets usually recover and more quickly than we often believe..
Behavioral mistakes often don’t recover at all. If they do, they can take much longer. That’s because we often seek rationale for our selling under duress with the belief markets will once again revisit the levels we sold at..
Why Corrections Are Necessary
As uncomfortable as they are, corrections serve an important function.
They:
- Reset valuations
- Cool excessive optimism
- Reprice risk
- Reinforce discipline
- Create long-term opportunity
- Test emotional resilience
In other words, they keep markets healthy — even though they feel unhealthy while happening.
If markets never declined, speculation would explode unchecked, risk would be mispriced, and long-term sustainability would weaken. It’s not to say politicians and central banks won’t try to create that net that everyone so desperately wants.
Corrections are painful — but protective.
Thanks for reading,
Brian Aberle, CFP®President
Aberle Investment Management
Aberle Investment Management LLC is a registered investment adviser. The information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to consult with a qualified financial adviser or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future returns. i>