Daily Gains Letter

Market Correction

A market correction is a pullback that is based on the percentage that the market sells off. Usually analysts will say that a sell-off of less than 10% is a market correction and more than 10% would constitute a market crash. While the difference is negligible, a market correction is more orderly and normal, whereas a crash is more severe and has the signs of structurally breaking the trend in the market. No market moves in one direction without pullbacks and many investors view a market correction as a positive occurrence, allowing them better prices on which to enter their positions.

How to Prepare for the Stock Market Sell-Off I’ve Been Warning About

Stock MarketWell, that didn’t take long! Just a few weeks ago, I wrote an article stating that investors should begin to worry about the lofty level of the stock market. Since that time, the S&P 500 has dropped by more than five percent in less than two weeks. This market correction won’t be a surprise to my readers, as I have been suggesting investment strategies that can help prepare your portfolio for a large downswing in the market for some time now. When I wrote the article in late January, the S&P 500 was surging, even though the preliminary Thomson Reuters/University of Michigan index of consumer sentiment dropped month-over-mo ... Read More

Weathering the Storm: Three Tips for Outlasting the Eventual Stock Market Correction

190413_DL_whitefoot “Buy low, sell high.” It seems so easy. Could there be a more simplified (read: misguided) piece of investing advice out there? In this economic climate, many investors who want to come in off the sidelines are wondering if a better adage would be, “buy high, and sell higher.” On the other hand, after an explosive ascent, other investors are waiting patiently to buy on the eventual dip. The big question, of course, is when will there be a dip or market correction (a pullback of 10% or more) for investors to take advantage of? It’s not as if there isn’t enough of a global impetus to drive a market correction. The U.S. is racked with massive debt and high unemployment, gross domestic pr ... Read More