How to Think About the Market's Recent Sell-Off
Investing legend Warren Buffett isn't fazed by the recent bout of volatility in the market...
When asked about it, he noted, "This is nothing."
He went on to explain that the stock market has fallen by 50% on three separate occasions since he started leading Berkshire Hathaway in the 1960s.
I, too, have been in the stock market for many decades...
I was on the trading desk at Goldman Sachs on October 19, 1987, the day the Dow Jones Industrial Average plunged 23%. You'll know this historic crash simply as "Black Monday."
Only a week after Black Monday, the market had another day where it dropped 8%.
On the desk – and more accurately, all over Wall Street – we spent our days and nights in a panic. Every decision seemed like the most important one of our lives. And no one had any confidence in what would happen next.
I also watched the 1989 junk-bond wipeout and the Asian and Mexican crises of the 1990s. I saw the dot-com bubble inflate and pop. And, of course, it doesn't seem that long ago that banks were collapsing during the housing crisis of 2008.
Those were times when it made sense to worry.
What we're seeing today is, as Buffett put it, nothing.
But this is a good reminder for folks who have been nervous about stocks lately.
The S&P 500 Index is only down 6% from its January high. The tech-heavy Nasdaq Composite Index is off its high by 10%.
Market corrections – drops of 10% to 20% – happen all the time in bull markets. During the bull market from 2009 to 2020, for example, there were six 10% to 20% market drops. Take a look...
The last market correction we had was back in the fall of 2023. Stocks fell 10% from the end of July through the end of October.
In short, we were simply due for stocks to take a breather. Market corrections are a normal part of the cycle.
Plus, another indicator is telling us that this current sell-off looks a little overdone.
I'm talking about the relative strength index ("RSI").
Basically, the RSI is a contrarian indicator. It shows us when a stock or index gets ahead of itself in either direction by flagging "overbought" and "oversold" signals.
When the RSI moves above 70, a stock or index is considered overbought, and a downward trend is likely. When the RSI drops below 30, it hits oversold territory, and an upward reversal often follows.
The chart below looks at the RSI for the Nasdaq Composite. As you can see, the RSI recently dipped below 30. That means a rebound is likely from here...
Of course, that doesn't mean stocks are going to soar immediately. It all depends on the war in Iran... and how oil prices will affect inflation and interest rates. But as of now, there's little evidence that this selling will turn into a prolonged bear market.
Bear markets usually happen when folks are overly optimistic about stocks and there are no buyers left to prop up the market.
That doesn't seem to be the case today.
I'm still cautious on the market overall because of valuations. But I'm not sweating this recent sell-off, either.
Put simply... this is nothing.
Someone else who isn't sweating this recent sell-off is Stansberry Research's mystery tech insider...
For 25 years, this insider has operated at the highest levels in the tech and finance industries. He has advised billionaires, briefed congressional committees, and even predicted the rise of bitcoin and the recent software sell-off.
Now, he wants you to know that "There is still a ton of upside left in the stock market for those who get strategic."
Next Tuesday, April 7, he's hosting a free online event where he'll give you a market road map for the rest of 2026... discuss how the coming days could mark a critical inflection point for your wealth... and share how you should position yourself to profit.
On top of all that, you'll even get a free recommendation just for tuning in. You can learn more here.
What We're Reading...
- Something different: McCormick (MKC) buys Unilever's (UL) food business in a deal that values it at nearly $45 billion.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
April 1, 2026