Six Things You Should Know About a Stock Market Correction

stock market crash photo


Just because we're experiencing our first stock market correction since 2011 doesn't mean it's time to panic. Here are six things you should be aware of when it comes to stock corrections.

1. Stock market corrections happen often

The first thing you should know is that stock market corrections happen -- and fairly often. The U.S. economy naturally peaks and troughs over time, and in response the stock market will also have its peaks and troughs.

2. Stock market corrections rarely last long

In a broader context, while a stock market correction is an inevitable part of stock ownership, corrections last for a shorter period of time than bull markets.

3. We can't predict what'll cause a stock market correction

A stock market correction may be inevitable, but one thing they aren't is predictable.

4. Stock market corrections only matter if you're a short-term trader

Another important point you should realize is that stock market corrections really aren't an issue if you remain focused on the long-term with retirement as your goal. The only people who should be worried when corrections roll around are those who've geared their trading around the short-term, or those who've heavily leveraged their account with the use of margin.

5. They're a great time to buy high-quality stocks at a bargain

For the long-term investor, a stock market correction is often a great time to pick up high-quality companies at an attractive valuation.

6. They're also a good reminder to reassess what you own

Lastly, a stock market correction is a good reminder for long-term investors to reassess their holdings.

This post is based on the great content written in 6 Things You Should Know About a Stock Market Correction, you should go there to read more about this subject.

stock market crash photo

Photo by AZRainman

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