History Says a Stock Market Correction Is Coming Eventually. Here's the Good News for Investors.

Yahoo Finance ·

A stock market correction is definitely coming. Eventually. In fact, I don't think a correction -- a decline of at least 10% -- is imminent. It might be, but at the moment, the economy looks strong, and the market has weathered the spike in energy prices resulting from the ongoing war in the Persian Gulf. Plus, calling market tops and bottoms is a mug's game. And one I'm not interested in. That said, a correction will happen eventually. And it will be caused by geopolitical tensions, spiking oil prices, stock overvaluations, rising interest rates, spiking bond yields, disappointing economic data or corporate earnings, or runaway inflation... or a combination of several of these. Because they can be caused by so many things, corrections are relatively common. They occur, on average, every 2.2 years. And the average market decline is 21% (including bear markets, defined as corrections of more than 20%). In fact, there was a market correction just last year, after the Trump administration announced tariffs on U.S. trading partners, which the president called "Liberation Day." There was a correction in 2022 that was due to aggressive rate hikes by the Federal Reserve in response to spiking inflation. Here's the good news for investors. The U.S. stock market recovered from each of those corrections and went on to post new highs. And most corrections don't last very long. The average length is about 115 days, according to Yardeni Research. Of course, bear markets can last longer. Because I've been writing about the U.S. economy and financial markets for three decades, friends and relatives often ask me whether a market correction is coming and what to do. I tell them it definitely is, though it's impossible to know when.

DYAX Investor Sentiment

Bullish (Long) 47% · Bearish (Short) 53%

381 participants

Related News

원문 보기 — Yahoo Finance