Putting the Correction in Perspective

The volatility of the markets in the past 1.5 weeks has caused a lot of consternation in a lot of people. 400+ point moves every day is enough to get the juices flowing.

Historically, so far this correction is very mild and short. The above chart shows where are right now.

Does this mean we have further to decline?

That is always the big question. I put very little emphasis on reversion to a mean, so what has happened in the past and where we are currently means very little to me.

We have to look to other analysis to make our determination whether this is the first leg of a declining market or a short term event.

Hopefully you’ve been listening to my videos to gauge where I am on this question

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The Dow Jones Industrial Average is an unmanaged, price-weighted index of 30 large capitalization stocks with dividends reinvested.

The Standard & Poor’s 500 Index (“S&P 500”) is an unmanaged, market capitalization weighted index of 500 widely held stocks, with dividends reinvested, and is often used as a proxy for the stock market.

The Nasdaq Composite is an unmanaged, market capitalization weighted index of stocks listed on the Nasdaq Stock Exchange, and are reported as price return without reinvestment of dividends.

Indexes are often used as a proxy for the stock market and cannot be invested in directly.