On average there is a 20% correction in the stock market every 3 years. We are overdue. The market, on average, is UP 3 of 4 years. Did you you know that we’ve been up 9 of 10 years? That’s not bad. Look it up. But I’m sure your neighbor has regaled you with the stories of his riches derived by betting against Lehman Brothers.
These are the facts. If you say the market will be down in a given year, you’re going to be wrong 75% of the time. A diversified portfolio likely won’t correct more than the market and may outperform. Do you think if you own Apple (AAPL) Boeing (BA) Disney (DIS) Verizon (VZ) and Honeywell (HON) it will be down 20% over the next 12 months, especially when reinvesting the dividends? It wouldn’t be. (BTW, I only own AAPL in that “model portfolio).
Personally I’d start buying Disney and Boeing at 5% down, 1/4 more at 10% down and double down if they ever got to 20%, assuming there was no news material to their businesses. I doubt I get the chance.
The real “safe money” in the stock market is being paid to have an opinion and the best way to continue to get paid is to “make a call” and repeat it until you are correct. “I told you that the market would correct!”. Yeah but you’ve been saying it for 10%….
If the S&P gets to 2,000 and then corrects 20%, you realize that would be 1600 or roughly where we were late last summer…Could you imagine? No one was calling for a correction there right? Remember the Taper Tantrum? Remember Syria?, Remember the Arab Spring? Remember Greece? Now we have Iraq…I can find you something to worry about on any given day. It’s not hard.
Personally, I”m hoping for a correction based on nothing but price, I’d like to buy some stocks lower, I’d like to add more to my kids 529 fund. I was hesitant to do that at 1860 in the Spring (trying to be clever)….here we are 100 points higher.
Take profits on huge gains, play with ITM options on exiting longs and take some money off the table if you want. Reeeeeelax. During the 50’s we had the Korean War, a potential nuclear holocaust and talk the economy only picked up because of WWII. In the 80’s, Iran Contra, the Cold War, horrible inflation, those two decades were amazing times to be in stocks. No, I didn’t trade then, but I can read.
You’ll get your correction and you will be okay. Some people are worried about where there next meal will come from, you’re worried about getting Apple 10 bucks lower. Keep it in perspective.