Things to try in a market correction:

• Respond emotionally, giving in to your lizard brain. It does a good job of keeping you alive, so you might as well hand over management of your portfolio to it.

• Rely on your gut instinct to lead you out of trouble. After all, your instincts helped you buy gold at $400 and sell Apple at $700, right?

Deviate from your plan, because really, what’s the point of having a plan if you can’t change it on a whim?

• Aggressively overtrade, because all of those capital gains taxes are helpful in reducing the federal deficit.

• Rely on the pundits’ market calls, because their sole interest is making sure you are comfortable in retirement.

Flail aimlessly, and with any luck, something you do will turn out well.

Hope is good. Hoping that things turn out for the best never did anyone any harm.

Panic is always an option, because that always works out so well for people.

Continues here




Category: Cognitive Foibles, Investing, Markets, Psychology

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

4 Responses to “What to Do in a Market Correction”

  1. Stock Soup says:

    List your favorite stocks you’re looking to buy on a pullback.

    I’m a buyer of XOM at 96 or below, not there yet

    Who’s got balls to pick up VGK here?

  2. Stock Soup says:

    … and, I think the S&P500 will bottom out a 2 or so percent below the 50DMA, if recent sell-offs are a guide.

    that would be around 1860

    we’re at 1960 now, so we need another 5% sell off before buying

  3. Just program buy orders at limit prices and use the market’s increasing volatility and drop to your advantage.

  4. elliottw says:

    Meb Faber listed Portugal as the 10th cheapest country by CAPE on 3/31, and the PGAL ETF is about 15 % cheaper now. That would likely put its 10-year CAPE ratio in single digits.
    It could certainly get cheaper in the coming days if bad news continues to trickle out. If you could buy it when the bad news is at a fever pitch and promise yourself not to check the price for five years, you might be pleasantly surprised.