Stock Market Correction, And?


Suzanne Coleman

I am still reading posts about the stock market that warn of a stock market correction.  If these people were paying any attention, they would realize that we have already had a stock market correction.  A correction is defined as drop in a stock or index of over 10%.

A large number of stocks have pulled back over 10%, for example Tesla (TSLA), Discover Financials (DFS), Walmart (WMT), Alibaba (BABA), IBM (IBM), Priceline (PCLN) and others.

Apple (AAPL) who had historically excellent profits on their last quarterly report is now down about 8%.

The thing is, some of these stocks have had negative earnings reports or other issues affecting their stock, but when does this define a correction and when does it not?  The concern about a correction is really discussing the impact of the overall economy, or other issues, on the prices of stocks in the market.  If people don’t want to hold stocks and sell, then that can lead to a correction.

The stock market has obviously (based on some of the stocks I watch) shot up over the last years.  Is this irrational exuberance?  Is this based on the flow of money into the stock market, placing it at the equal and opposite risk of flowing right back out?  Are these investors going to stay with the market thru thick and thin?  All of these answers are complicated.  Anything can lead to an exodus from the market, which of course will lead to prices crashing.  So trying to predict it is a bit foolish, since the market is based not on company values but on human behavior.  Humans are very predictable, and some of their predictable traits en masse are following leaders, bad or good, making rash decisions, panicking, placing their trust in “authority figures,” believing what they are told without researching it for themselves, and others all of which can lead to a market crash at any time, with, or without, any underlying financial reason.

If you are concerned about a market correction, take your money out of the market, or place stop orders (which don’t really protect you and can actually harm you even more…).  There is no guarantee in the stock market, as of now, and it’s unlikely that there ever will be one.  There are some protections, but still, the big players will continue to win over the individual investors as I have learned the hard way.  Right and wrong do not enter into our systems very well, and it’s more of a situation where you need to protect yourself or face the risk of wasting years fighting the criminals who steal your money.

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