After a relatively quiet first half of 2024, let’s not forget that volatility is an inherent part of the equity markets. It’s common to see declines of at least 5 percent almost every year, with corrections of 10 percent or more occurring in 56 percent of years and drops of 15 percent or more happening roughly one-third of the time.

Even in years when the S&P/TSX Composite Index has performed strongly, there are often significant intra-year declines (see graph below). Since 2005, the average intra-year drawdown has been -15 percent, despite the S&P/TSX delivering an average annual return of around 6 percent.

Successful investing involves preparing for both the inevitable ups and downs that come with market volatility. While it’s never easy to see portfolio values decline during periods of temporary volatility, it’s important to maintain patience and perspective to see these periods through.