The S&P 500 took less than one month to fall 10% from its most recent all-time high on February 19.¹ This marked the fifth-fastest market correction since 1950.¹ That is, of course, until President Trump announced a 10% tariff on all imported goods to the U.S. on April 2. The next day, U.S. stocks experienced the largest one-day decline since 2020 and the S&P 500 dropped more than 10% across the two trading days following the announcement.² 

Are we experiencing a mere market correction or the beginnings of a full-blown bear market?

A market correction is generally considered to be a drop in the market of more than -10% from a recent high. Such a drop becomes a bear market if losses eventually exceed -20%. Historically, market corrections have occurred roughly every couple of years.¹ Since 1928, there have been 60 market corrections, 17 of which evolved into bear markets.³

Nearly half (44%) of all corrections since then have been associated with recessions.³ At the same time, many corrections have occurred during bull markets — the 11-year bull run from 2009 to 2020 experienced five corrections.¹ 2023, a year that ended up 24.23% for the S&P 500, also experienced a correction of -10.3% from July to October.¹ Yet in 2022 when the Federal Reserve began raising interest rates to combat unprecedented inflation, the market experienced a correction that turned into a fierce bear market, dropping 25.4% through October of that year.¹

Market corrections, and the potential bear markets they may become, often end just as abruptly as they began. Knowing where the bottom is and when the downturn will end is impossible to predict.

Since 1946, corrections that managed to right themselves before turning into bear markets took an average of 133 days to hit rock bottom and 113 days to recover their losses. The S&P 500 lost an average of 14% during those corrections. Since 1929, the average bear market took much longer to bottom out — 19 months — and experienced much more severe losses — an average of -38.5% to the S&P 500.

Fortunately, bear markets have historically not lasted nearly as long as bull markets over the past 60 years.⁴ And as bad as these corrections are, even some of the greatest losses to the market during the dot-com bust, the 2008 financial crisis, and the 2020 coronavirus pandemic all recovered for investors who stayed invested.¹

For investors who want to stay invested but have the potential to protect against market corrections like the ones we’ve experienced this year, TrueShares offers a buffered ETF strategy. The TrueShares Structured Outcome ETF series utilizes a “buffer protect” options strategy that seeks to provide investors with an 8-12% downside buffer (with the advisor targeting 10%) on the first of the S&P 500 index’s losses over a 12-month investment period, beginning on a specified date and resetting exactly 12 months later.

While it’s too late to avoid this year’s losses, it’s never too late to start investing for whatever the rest of the year’s markets have in store.

For more product information, visit: https://www.true-shares.com/products/

1. https://finance.yahoo.com/news/10-drop-stocks-scary-isnt-200738449.html
2. https://www.usbank.com/investing/financial-perspectives/market-news/is-a-market-correction-coming.html
3. https://finance.yahoo.com/news/now-p-500-experienced-correction-130000796.html
4. https://www.schwab.com/learn/story/market-correction-what-does-it-mean

Fund Disclosures:

The Funds will not terminate after the conclusion of their respective Investment Periods. After the conclusion of an Investment Period, another will begin. There is no guarantee that the outcomes for an Investment Period will be realized. The outcome may be realized only if you hold shares on the first day of the Investment Period and continue to hold them on the last day of the Investment Period. If you purchase shares after the Investment Period has begun or sell shares prior to the Investment Period’s conclusion, you may experience investment returns very different from, and potentially less favorable than, those that the Fund seeks to provide. There is no guarantee that a Fund will successfully achieve its investment objective. A shareholder that holds shares for an entire Investment Period may still lose his or her investment in the Fund.

Each Fund seeks to provide only those shareholders that hold shares for the entire Investment Period with a buffer against the first 8%-12% of S&P 500 Price Index losses (based upon the value of the S&P 500 Price Index at the time the Fund entered into the FLEX Options (or standard exchange-listed options) on the first day of the Investment Period) during the Investment Period. Shareholders will bear any and all S&P 500 Price Index losses exceeding the 8%-12% buffer. The buffer is determined based on the performance of the S&P 500 Price Index only and does not take into account the effect of a Fund’s Total Annual Fund Operating Expenses on its performance. In addition, the returns that each Fund generally seeks to provide does not include the costs of purchasing Fund shares and certain expenses incurred by the Fund. While each Fund seeks to limit losses for shareholders who hold their shares for the entire Investment Period, there is no guarantee that the Adviser will implement a Fund’s investment strategy successfully or that such investment strategy, including the buffer, will produce the intended results.

As explained in greater detail in this Prospectus, if a Fund has experienced certain levels of gains or losses since the beginning of an Investment Period, there may be little to no ability for the Fund to achieve gains or benefit from the buffer for the remainder of the Investment Period regardless of the Adviser’s effective implementation of the Fund’s investment strategy. Depending on market conditions at the time of purchase, it also is possible that a shareholder that purchases shares after an Investment Period has begun may lose his or her entire investment. For example, if a Fund decreases in value beyond the pre-determined 8%-12% buffer after an Investment Period begins, an investor purchasing shares of the Fund at that price may not benefit from the buffer even if the investor holds the shares for the remainder of the Investment Period. Similarly, if a Fund increases in value, an investor purchasing shares of the Fund at that price may not benefit from the buffer until the Fund’s value decreases to its value at the commencement of the Investment Period. An investment in a Fund is only appropriate for shareholders willing to bear those losses. The Funds’ website contains important information that will assist you in determining whether to buy shares.

Each Fund’s investment strategy is designed to produce an outcome upon the expiration of the options it holds on the last day of the Investment Period. Shareholders should not expect that such outcome will be provided at any point prior to that time and there is no guarantee that the outcome will be achieved on the last day of the Investment Period. The Funds have characteristics unlike many other traditional investment products and may not be suitable for all investors.