In late 2018, the US stock market declined swiftly from October 2018 to December 24, 2018. The S&P 500 fell by almost 20%. An unexpected rate hike by the Federal Reserve triggered the broad-based selling. 

Thankfully, President Trump spent 2018 Christmas Eve trashing the Fed on social media. Ultimately, the FED immediately pivoted away from the hawkish stance, and by February 2019, we had significantly recovered market losses.

In 2022, the S&P 500 went considerably lower again due to the FED's actions. The FED has steadily and rapidly raised interest rates. Further, they have indicated additional rate hikes and a continued hawkish stance until inflation is under control. 

How long will it take to get inflation under control?

With so many factors at bay, people can only guess how long it will take for the FED to indicate that they are comfortable with the level of inflation. It takes time to see the effects of an interest rate rise. Data is lagging. 

"A September CNBC survey of analysts, economists, and fund managers reveals that most believe that by 2024 inflation will have sunk close to the Fed's 2% target". Hal Bundrick, CFP

The uncertainty and lack of clarity continue to frustrate investors.

Don't Predict the Future. Plan for it

I believe a sharp decline in the S&P 500 would trigger a dovish response by the FED—a move to stabilize the markets, like in 2018.

But, of course, when the FED may act favorably is a mystery. No one can predict. 

In the meantime, investors should be prepared. Review your accounts. Investments should be aligned with your goals. If you are in the accumulating phase, contributions to accounts should continue. 

Embrace the decline as an opportunity to build positions in companies you love at these levels.

For most of you, think long-term. This, too, shall pass. Hang in there.

Remember, we could catch some surprising news if the market gets too out of control.