We all know by now that the market had a rough week and it’s off to a rough start this month after having a HUGE January. The S&P500 was down -5% this week and so far it is down -7% this month, the Nasdaq and the Dow Jones are down similar numbers. Corrections are not easy, with everyone having the ability to see everything real-time it just exacerbates behavioral mistakes. I can’t even imagine how many people just lost their marbles last week in the midst of all the volatility.
Here are some of the things you need to know;
Not every 5-10% correction leads to 50% correction, here’s an old post that is relevant now; S&P 500 Field Guide to Corrections.
Here’s what happens after we get these “common” intra-year declines; What happens next? via LPL-Research.
In 2010 we had the flash crash, this time around we have the XIV crash, we might have a similar roadmap; The Flash Crash, XIV Crash.
I want to make something very clear; THE INDICES HAVE A TENDENCY TO COMEBACK, INDIVIDUAL STOCKS ARE COMPLETELY A DIFFERENT STORY. A LOT STOCKS DON’T COMEBACK, AND USUALLY NEW BULL MARKETS ARE LED BY NEW LEADERS NOT THE OLD LEADERS. WHILE YOU CAN MAYBE TAKE A PASSIVE APPROACH WITH YOUR INDEX HOLDINGS (depends on age, etc) YOU HAVE TO BE VIGILANT WITH YOUR STOCKS.
STOCK OF THE WEEK RECAP
Frank Zorrilla, Registered Advisor In New York. If you need a second opinion, suggestions, and or feedback in regards to the market feel free to reach me at firstname.lastname@example.org or 646-480-7463.