A market correction refers to a price decline of at least 10 percent in a market index following an upswing in market prices. In contrast, a bear market is defined by a steep decline of 20 percent or more.

Since the stock market crash of 1929 that marked the start of the Great Depression, bear markets have only occurred 10 times and the key driver in eight of those 10 bear markets was a recession.

So, what is a recession?

This is when the business cycle contracts and there is a slowdown in economic activity. A recession is officially defined as two consecutive quarters of negative economic growth as measured by Gross Domestic Product (GDP).

According to the Bureau of Economic Analysis, the GDP for the second and third quarters of this year has been 4.2 percent and 3.5 percent, respectively.

Although declines in financial markets can be unnerving, pulling all your money out of investments after a market correction may not be the best course of action. Although past performance cannot guarantee future results, history illustrates that staying the course may be prudent because longer investment holding periods have historically led to better results.

Let’s explore that history a bit.

Over the past 50 calendar years, or 600 months, the market has declined by more than 10 percent during seven calendar months and more than 20 percent for only one calendar month. Now, apply this concept to rolling (overlapping) one-, three-, five- and 10-year periods.

For example, Dec. 12, 1967 to Dec. 31, 1968 is a one-year period, as is Jan. 31, 1968 to Jan. 31, 1969, and so on. The market experienced positive returns during about 78 percent, 85 percent, 89 percent and 95 percent of the rolling periods for one, three, five and 10 years, respectively.

In fact, of the 24 rolling 10-year periods (out of 481 periods) during which the markets had negative returns, all included the 2008-2009 market crash — arguably a market anomaly.

Even if you were an extremely unlucky investor who invested $1,000 at the end of the month just before each of the three worst calendar months for the S&P 500 (October 1987 with a drop of 21.5 percent, August 1998 with a drop of 14.4 percent and October 2008 with a drop of 16.8 percent), you still would have accumulated $22,477 by the end of last calendar year if you left the money invested. That’s an average annual return of 9.27 percent.

So again, although past performance cannot guarantee future results, history seems to suggest that staying the course in the stock market may be prudent, even with occasional market corrections.

As stated by Winston Churchill during a 1953 speech in the British parliament, “In finance, everything that is agreeable is unsound and everything that is sound is disagreeable.”

Wendy Bennett is a senior financial adviser in Butler.