US stock markets are now down more than 25

per cent from their highs of less than a month ago.

And we have just experienced the biggest one-day sell-off

in American markets in over 30 years.

That makes this the perfect time to take a step back

and to take a deep breath.

This is a chart of the S&P 500 over the last decade.

There are two big points to make which

will help put the recent furious sell-off into perspective.

The first is that for all the fear and fury

we are still not down to the lows hit at the end of 2018.

Less than a year and a half of returns

have been given up, except in certain sectors like banking

and energy, which have broken that important threshold.

The second important point to make,

which long-term investors who have

held the index for the full decade

have made an average nominal return of 10.2 per cent.

The reason this figure is important

is because over the very long term,

annual inflation-adjusted returns for American markets

average about 7 per cent.

And they mean revert to that level

very consistently over time.

So investors who've been in the market for 10 years

earning 10.2 per cent and with inflation

low at under 2 per cent are still

making above average returns over time.

That is both reassuring and frightening,

reassuring because as has been true for a long time,

investors who simply keep their money in the market

are still doing just fine.

On the other hand, of course, the fact

that 10-year average returns are still above average

suggests that markets could still fall more and still

be within the normal historical pattern.

Over the last decade, investors in the US stock market

have overearned.

They may still have more to give back.