Last month, we discussed how we might be on the verge of a correction. We also noted the futility of trying to time the start and finish of such events. What actually matters is how you react — or overreact.

As my colleague Josh Brown has observed, “since the end of World War II (1945), there have been 27 corrections of 10 percent or more, versus only 12 full-blown bear markets (20 percent or worse).”

However, the data show that the distribution of corrections isn’t smooth. Indeed, almost half (45 percent) of the corrections occurred either in the 1970s or the 2000s. Both eras were part of longer-term secular bear markets, characterized by strong rallies, vicious sell-offs and earnings contractions.

It is noteworthy that almost half of the corrections occurred in two out of seven decades. I suspect this fact isn’t a coincidence. From a 30,000 foot view, it may be a key to understanding how likely a more severe correction might be.

Continues here

 

 

Category: Markets

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 “Halfway through the Correction”

  1. Singmaster says:

    Cogent and calming.
    This too shall pass. Dum vivmus vivamus.

  2. S Brennan says:

    Good post, I agree with most, but I have to chisel at one burr:

    “Each time I think I have finally put George W. Bush’s misadventures out of my mind, something comes about to remind us…”

    Thatt’s true enough, but Obama has engaged in similar megalomania…although using the cheaper/faster/better paradigm, with:

    1] The arming/funding/CAS, of the Libyan rebels who represented the interests of Al Queeda and racist elements of Libyan society…the most prosperous on the continent of Africa…and one in which both woman and blacks were allowed to reach their full potential…and one in which the “dreaded Gaddafi” was more popular with people than any US President since FDR’s heyday.

    2] The arming/funding, of the Syrian rebels who represented the interests of Al Queeda…the most tolerant of Arab states in regards to religions, both of the book of Abraham and outside……and one in which woman were allowed to reach their full potential…and one in which the “dreaded* Gaddafi” was more popular with people than any US President since FDR’s heyday.

    3] And now the arming/$5,000,000,000.00(that we know of)/training/covert-troop-support of a coup on Democratic elected leader whose term had less than a year to run, in favor of a group who aspire to emulate their fathers/grandfathers support of NAZI genocide in the Ukraine.

    So far Obama’s efforts have created political & human disasters throughout the world and just like the 1st president of the Bush/Obama administration, the mayhem created by Obama’s ridiculous overreach threaten to last well into the lives of children yet unborn.

  3. S Brennan says:

    My bad,

    point 2] Delete: …and one in which the “dreaded* Gaddafi” was more popular with people than any US President since FDR’s heyday.

    And for the framing of the “dreaded* Gaddafi” for the explosion of Pan Am Flight 103 over Lockerbie, please read

    * http://www.lrb.co.uk/v31/n18/gareth-peirce/the-framing-of-al-megrahi

  4. Woof says:

    Other than the title to the article — and admittedly that’s a lot to overlook — I don’t see how the piece last month said we might be on the verge of a correction other than to say, essentially, that we might always be on the verge of a correction.

    It’s a very good piece, but seems more rationally dismissive of the pundits agonizing over the possibility of a correction than one that lays out a case that one is coming.

Leave a Reply

You must be logged in to post a comment.