On March 27, the Dow Jones Industrial Average (^DJI +0.59%) closed the week down 6% on the year and about 10% below its all-time high. The war in Iran, soaring oil prices, and inflation fears took their toll on sentiment, and investors began weighing the possibility that conditions could worsen considerably.

In April, things began to reverse. There was optimism that the conflict in the Middle East hadn't worsened, and anticipation that a quick resolution could restore conditions to their pre-war state. Concerns about inflation and oil prices remain, but U.S. stocks have rallied back despite them.

In recent days, the Dow moved back into positive territory year-to-date for the first time since early March. For investors who remained steadfast throughout the chaos, their patience was rewarded. Not everybody was able to hang on, though. And that carries an important lesson for all investors.

Image source: Getty Images.

Key takeaways from this recent market movement

• The Dow fell approximately 10% from its 2026 highs before recovering nearly all of those losses in April.
• Investors who sold during the March correction probably locked in losses and missed most, if not all, of the rebound.
• Since 1949, market corrections of at least 10% happen on average every 2.5 years.
• The average recovery time from a 5% to 10% downturn is three months. The average recovery time from a 10% to 20% correction is eight months.
• Since market corrections are common and recoveries are often quick, investors are usually best served by just sitting tight.

The correction happened due to a potentially short-term event

While signs of a potential economic slowdown were present months before the Iran war, geopolitical tensions were the big driver of this correction. The biggest consequences of this, including soaring oil prices, were significant factors in driving U.S. stock prices lower.

But, as is often the case, geopolitical events tend to be short-term. They can be very disruptive, but resolutions can happen quickly. Recovery periods can also be relatively short, as opposed to the long periods it usually takes to turn around a typical recession.

A look at the market's April performance shows that even the sense that a conflict resolution was near was enough to get stocks rallying again. Given that nobody knows what the actual timeline will look like for any of this, timing the market can be especially dangerous and usually fruitless.

Why does this cycle keep repeating?

Everybody tends to be fine with risk when stock prices are going up. It's when things turn south that people usually find out what their real risk tolerance is.

Market timing is notoriously difficult because it requires investors to be right twice in order to make it worthwhile. First, they have to sell before prices hit their bottom. Second, they have to have the discipline and luck to buy back in at a lower price than they sold at. The first part is possible. The second part is rare.

Studies show that the average investor return falls well short of the actual investment's return. The reason? Reactive trading at the wrong times. Investing is one of the few things where doing less work is actually rewarded!

What long-term investors should do right now

Stay invested if:

• Your time horizon is still at least several years into the future.
• You want to avoid the risk of missing out on the rebound.
• You're comfortable with the understanding that volatility is the cost of investing in the stock market.

Revisit your allocation if:

• You need this money for a specific purpose in the near future.
• Seeing your investments go down causes anxiety or lack of sleep.
• You want to build a portfolio that removes the temptation to trade emotionally.

Investors who sell during a crisis often lock in losses and miss the rebound. Staying invested for the long term has historically been the better plan.