This past week was rough for tech. Alphabet had its worst day since its 2004 IPO, and investors are asking whether the AI trade has gone too far. The S&P 500 is still up about 10% this year and the TSX about 13%. A pullback is not a surprise. It is a normal part of owning stocks.
Corrections are routine
Since 1980, the S&P 500 has fallen 10% or more at some point in 22 of 42 years. In 14 of those 22 years, it still finished higher. The TSX tells the same story. Since 2000 it has dipped about 16% on average within a year, yet 19 of 26 years ended positive.
Always back over time: usually fast, sometimes much longer
Over 10 years the S&P 500 returned 15.2% a year and the TSX 12.6%. Over 20 years, 11.3% and 8.3%. That includes four major declines: the 2008 financial crisis (-57%), the 2020 COVID crash (-34%), the 2022 bear market (-25%) and the 2025 tariff correction (-19%).
Most recoveries are quick. This spring's 10% pullback took about 11 weeks to get back to a new high. The 2025 tariff drop of 19% took about four months. The 34% COVID crash took about six months. The 2022 bear market took about two years.
Some take much longer. The dot-com bust took about seven years. The financial crisis, a 57% fall, took about five and a half years. The Great Depression took about 25 years. Timing varies. The direction does not: every decline in the modern record has been followed by higher highs.
October: scary month, often the low
October has a scary reputation. It is the most volatile month of the year and the month of the 1929, 1987 and 2008 crashes. But it is also where bear markets often end. Six of the S&P 500's 14 bear markets since 1950 bottomed in October: 1957, 1966, 1974, 1990, 2002 and 2022.
October is positive more often than not. The S&P 500 rose in 16 of the last 25 Octobers and the TSX in 17 of 25. That is context, not a timing signal. Fear tends to peak first. The recovery follows.
Stay fully invested
Over the 20 years to October 2026, a $10,000 investment in the S&P 500 grew to about $82,300, or about 11% a year. Missing just the 10 best days cut that to about $35,700 (6.6% a year). Missing the 20 best days cut it to about $21,500 (3.9% a year). Seven of the 10 best days came within two weeks of the 10 worst. Sell in the panic and you miss the rebound.
Use dips to your advantage: dollar cost averaging
Dollar cost averaging means investing a fixed amount on a regular schedule, whatever the market is doing. You buy more units when prices are low and fewer when they are high, which lowers your average cost. In a simple example, a market that falls 30% and returns to where it started still leaves a $500 a month investor about 15% ahead. That is hypothetical, but the arithmetic is real. If you save through a workplace plan, you are already doing it. Keep going.
Higher highs, higher lows
S&P 500 peaks: about 1,500 in 2000, 1,565 in 2007, 3,386 in 2020, 4,796 in 2022 and roughly 7,800 today. The TSX Composite shows the same staircase: about 11,400 in 2000, 15,200 in 2008, 18,000 in 2020, 22,100 in 2022 and roughly 36,700 in 2026. On both indexes, every low since 2009 has been higher than the last.
Global economic growth lifts company profits, and over time prices follow profits. Fear moves markets for weeks or months. Growth moves them for decades.
What to do
Stay fully invested. Keep contributing. Look out 10 years and beyond. If your plan still fits your goals, the right move this week is usually no move.
Brian Prokop, P.Eng., CFA, is CEO, Ultimate Designated Person, Chief Compliance Officer and an Advising Representative of LINK Plan Management Inc., a registered portfolio manager and a wholly owned subsidiary of LINK Investment Management Inc., which provides workplace savings solutions to companies and distribution partners.
This is general information and education only: not investment, tax or legal advice, and not tailored to any individual's circumstances. Plan features, contribution limits and tax treatment vary by plan and province; confirm your own details with your plan administrator. Figures are current as at the date of publication and may change. Examples are illustrative and are not forecasts or guarantees.
Past performance is not a guarantee of future results. Index returns are before fees and cannot be invested in directly. Examples are hypothetical. Recovery times and TSX levels are rounded.
Sources: Yahoo Finance and Trefis (Oct 29 to Nov 2, 2026; year to date as of Nov 2); Canadian Press and Trading Economics (TSX year to date); Plus500; BNN Bloomberg (Oct 1, 2026); Motley Fool (SPY, 20 years to Oct 2026); Calamos; RBC Wealth Management; ChartRow (S&P 500 via SPY, to Aug 25, 2026); Power Corporation (S&P/TSX Composite total return, to Mar 31, 2026); Morgan Stanley GIC; Globe and Mail; Global News; Fidelity.