Q1 2026 is officially over.. And honestly, it was not a pretty one.
The S&P 500 finished the quarter down roughly 5%, its worst Q1 performance since 2020. If you’ve been watching your portfolio, you already know the feeling. Red numbers, noisy headlines, and that quiet voice in the back of your head asking, “Should I be doing something? Should I have sold?”
But then last night happened.
The S&P 500 surged nearly 3% in a single session, the Nasdaq jumped close to 4%, both posting their best day in months. The trigger? Reports that Iran may be open to ending the war. One headline, one session, and suddenly the quarter’s anxiety looked a little different.
That’s the market for you. It punishes panic and rewards patience, sometimes in the same week.
Before you read too much into either the red quarter or yesterday’s green day, let’s just take a breath and look at what actually happened, what history says about moments like this, and what it actually means for you as a long-term investor.
Because Q1 2026 is not the first rough quarter the market has survived. And it won’t be the last.
We Have Been Here Before, Many Times
Corrections don’t feel routine when you’re in one. They feel isolated. It makes you feel like this is the worst market ever. You’ll feel like this time is different.
But look at what happened in the years prior. Every single one of those felt scary in the moment.
And today, despite all that pain, the market recovered and went higher than where it was during those drops. The chart doesn’t lie. Pain is temporary. The trend, over time, is up.
Tech Valuations Are Actually Even Healthier Now
Here’s something that doesn’t get enough attention.
Tech valuations have already been compressed below their long-run averages. The 10-year average forward P/E for the technology sector was around 22.8x. The 5-year average was 25.8x. Today, it’s sitting at roughly 20.5x.
Here’s another one. The premium that tech traded at relative to the broader S&P 500 hit highs of about 1.5x during the 2023 AI euphoria. Today, that premium is down to around 1.07x, the lowest since 2019. Before the AI boom. Before COVID stimulus.
The market is basically saying tech is worth almost the same multiple as the average S&P stock. And in my opinion, this is healthy. This is what you want.
Think of it like a marathon. You’ve been running at max speed for the last two years. Do you think it’s better to keep sprinting at that pace forever? Or is it smarter to slow down, catch your breath, and recover so you can sustain the run for the long haul?
When valuations run too hot for too long, a pullback is the natural correction back to reality. Not a crash. Not a crisis. But rather just the market resetting to a level that’s actually sustainable.
This Is the Price of Admission
There is no such thing as “zero-risk” in investing.
Since 1980, the average intra-year drawdown, meaning the biggest drop within any single year, has been 14.1%. Even in years the market finishes up.
What we’re going through right now is not an anomaly. It is completely, historically normal. It is the price you pay to be a long-term investor.
You cannot earn 10% a year on average and skip the pain. The two come together, whether you like it or not.
And for those who stayed through the pain? After a 10% correction, the average 12-month return has been plus 18%, positive 89% of the time. If you bought at the first 10% decline over the past 50 years, your average 12-month return was plus 11%, rising to plus 37% over three years.
The math is completely lopsided in your favour if you stay the course.
So What Do You Actually Do Right Now?
Here’s how I think about moments like this.
The question is not whether the market will recover. Historically, it almost always does. The question is whether you will still be in it when it does.
Fear pushes people out at exactly the wrong time. It whispers, “cut your losses, wait for clarity.” But clarity never announces itself. By the time the news is good, the prices have already moved.
Think of it like waiting for perfect weather before you leave the house. You’ll wait a long time, and you’ll miss the trip.
The investor who stays calm during the drops is not made of different stuff. They’ve just made peace with the fact that volatility is not the enemy. Volatility is the vehicle.
The quality of your decisions in moments of fear will define the quality of your long-term returns.
So don’t make a decision today that your future self will regret.
And patience, more often than not, is what separates good decisions from costly ones.
Patience builds wealth,Bjorn