The currently-accepted definition of a “market correction” is a price drop of 10% from its peak. There have now been five corrections to the S&P 500 stock index since the bear market of 2009 (seven if you count the 9.8% and 9.9% drops). Here’s a nice visual timeline from the NY Times.
Here’s a corresponding list of all the cited reasons from Bloomberg for the corrections and near-corrections.
If you look at all of those concerns, they all seemed pretty legitimate and scary at the time. The general idea of these articles is that corrections happen regularly, so don’t freak out. Of course, I could also repeat another one of those investing truisms: “A bear market is coming. I’m not saying it’s now… but you know, there will be another bear market in the future.”
This is another item in my big folder of things that are “interesting but not going to change my investment plan”. My plan remains still to buy, hold, rebalance, and keep collecting those dividends and interest payments. David Merkel has a nice summary of how to create a portfolio that allows this hands-off attitude:
[…] my final point is this: size your position in risk assets to the level where you can live with it under bad conditions, and be happy with it under good conditions.
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Read More: Recent Timeline of Stock Market Corrections