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5 things to know about a Stock Market Corrections

How does one predict it?

  1. No one can predict what causes a correction; if we could, then wouldn't we prepare for it!!

  2. How often do they happen? In the USA, since 1928, there have been 103 instances when the S&P500 pulled back 10%. Yes, they happen often.

  3. How long do they last? In the above 103 instances, they lasted an average for 3.5 months. Basically, they are quite short.

  4. Should I be scared? Long term investor...s have nothing to fear from a correction...traders another story!

  5. What should we do in a correction? Corrections provide an opportunity for long term investors to buy "appropriate" stocks or funds at a bargain.

Peter Lynch in his book -- One Up on Wall Street famously said that “People who succeed in stock markets also accept periodic losses, setbacks, and unexpected occurrences. Calamitous drops do not scare them out of the game”

Equity markets continue to provide the best long term performance of any financial asset.

Stay calm, stay focused and let your money work for you.

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