Let’s Talk About Corrections

Jan 21, 2014Intentional Ownership

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A correction in the market is when the market drops 10%. It takes a drop of 20% to define a bear market. Since 1946 the S&P has dropped an average of about 14% almost every year. The drop has been as large as 15 – 19% 1 year out of every 3.

Why do I bring this up now?
– 2013 was a good year for the markets.
– However it did not see a correction during that time.
– The last correction was in 2011 and saw a 19.2% decline from April to October

If a correction comes on average every year, I want to make sure we are not surprised if we see one this year. This is like in the old movies where the cavalry colonel looks up and says “It’s awfully quiet on the plains tonight.” And the old Indian responds “Yeah. Too Quiet.” I’m not saying I know when one will come, or how large it will be whenever it might come. I’ve learned that the mother of panic is surprise. My job is to not let the people who rely on us get surprised. As I said, corrections happen almost every year the odds say we must be getting closer to one.

Have a blessed and happy 2014.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.