Corrections tend to come on fast, and hard. The current bull market has had a number of them. The worst though, came in 2011, when major European countries seemed on the brink of default. The Dow Jones fell from almost 12,700 to 10,700 very quickly, a fall of over 18%. The damage took a few months to repair but by February we were off to the races again.
The latest fall has been similar, the Dow falling from a recent peak of 18,200 to its close yesterday of about 16,000. Sounds worse, 2,200 points. But on a percentage basis we’re talking 13%. We can go down another 5%, to 15,300, before we will even make the 2011 mark, on a percentage basis.
As we’d predicted in yesterday’s daily news post, the final numbers from yesterday showed the Dow down 2.94%, 469.68, to finish at 16,058, the S&P 500 down 2.96%, 58.33, to finish at 1913, and the NASDAQ down 2.94%, 14.40, to finish at 4,636. Oil gave up all the previous day’s gains, with West Texas Intermediate dropping to $45.04/barrel, down 8.46%, and Brent dropping to $49.17, down 9.2%. The dollar even fell against other currencies, dropping to $1.13 against the Euro and 119.7 against the Yen.
Still, the word on the street remained, don’t panic. Oil will go back up, lifting the energy sector. The dollar is not collapsing. China will find its footing, somewhere, once the government accepts that it can’t control markets. Within a few months things should be OK.
Meanwhile, Check Your List Of Stocks
Meanwhile, this is a good time to check your own list of stocks you would buy if they got to a specific price, and see how many have gotten there. This is why investors should always keep some cash around. It’s also why it helps in bull markets to ask, “Would I buy this stock at this price” and if the answer is no, consider selling it. Otherwise, just relax. The market recovered from its 2007-2009 crash by early 2013. If you panicked you have missed one of the greatest bull runs in history.
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