corrections aren't always bad for markets.

Corrections can help overheated markets cool off before they head into "bubble" territory. They can also help savvy investors pick up solid investments at bargain prices.


a market correction isn't a crash, don't panic.

A stock market correction happens when an index, like the S&P 500, falls 10% or more from its high. Though they can be stressful, they're inevitable and a natural part of the market cycle.


think market corrections are rare? think again.

The S&P 500 has experienced an average intra-year correction of 14.1% since 1980. Corrections of 10% or more happen about once a year.

Sources: https://am.jpmorgan.com/blobgim/1383407651970/83456/MIGTM_3Q17.pdf?segment=AMERICAS_US_ADV&locale=en_US https://www.americanfunds.com/individual/planning/market-fluctuations/past-market-declines.html


we don't know what will cause the next market correction, but these factors usually contribute.

  • Emotion:
    Greed can cause investors to irrationally chase performance while fear can cause panicked selling when markets turn.
  • Risk:
    During upswings, investors can become over-optimistic and take on too much risk, priming markets for a retreat.
  • Headline:
    Unpredictable political, economic, and natural events can alarm markets, sparking a pullback.

when the next market correction hits, headlines will tell you the sky is falling.

The media makes money by attracting eyeballs with hype. Tune out the noise and focus on your goals - not theirs.

black monday: global stock markets crash...
global markets hit panic button...

in a market correction, don't panic and sell.

Corrections are periods of high market volatility and the good days and bad days tend to cluster. If you panic and sell, you're likely to miss some of the best days of market performance.

Source: http://www.marketwatch.com/story/how-missing-out-on-25-days-in-the-stock-market-over-45-years-costs-you-dearly-2016-01-25


this is why average investors get hurt by market corrections.

Investors have a bad track record at picking stocks. Research found the average investor trailed the market by 4.70% in 2016. One potential reason why? Knee-jerk reactions to negative market sentiment throughout the year.

Source: https://globenewswire.com/news-release/2017/04/04/954316/0/en/DALBAR-Study-Shows-Trump-Rally-Left-Average-Investor-Behind.html


"stock market corrections are an inevitable part of being an investor. don't let them stress you out."

Kyle Eaton, CFP®
Hedgefield Wealth Management

Watching your portfolio take a beating can be gut-wrenching. But, the worst thing you can do is panic and sell. You are smarter than you think. You chose your investment strategy because it fit your needs and objectives. Market turmoil doesn't change that.

In the moment, it's hard to tell the difference between a short-term dip and a prolonged pullback. So, what should you do when markets retreat?

  1. Take a deep breath.
  2. Don't give in to the inevitable media hysteria. If you're feeling nervous, turn off the television and stay off the internet.
  3. Take another deep breath and remind yourself that market corrections are normal and a healthy part of market cycles.
  4. Remind yourself that you had solid, rational reasons for the investments you chose.

Educate Your Friends About Market Corrections!

Still worried? Here's where I can help

One of the most important services I provide is that of a calm and reassuring presence during times of turmoil. My job is to help you stay calm and focus on the big picture. If you're a long-term investor holding a well-diversified portfolio, a market correction should be a blip on your radar.

If you're having a hard time staying cool when markets retreat, it might be time to reassess your financial strategies and risk tolerance. Here's a good rule of thumb: If you can't sleep at night, you might be taking on too much risk.

Remember: it's my job to worry so that you don't have to. If prudent changes need to be made to your strategies, I'll let you know.

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