Correction Complete

[RetireAge50]

When you hear the term correction most think stocks falling back a bit. I think stocks were undervalued after the 2008 fall. Now with the big 2013 gain they have "corrected" back to where they should be.

Expect stock portfolios to double every 8 or 9 years from here (as usual).

 

[Meadbh]

Can we quote you on that in 2022?

 

[GrayHare]

When I saw the title, I figured you were talking about today's 100-point Dow drop.

 

[braumeister]

This time it's different.

 

[RetireAge50]

See Chart.

Over the last 30 Years Stock Returned:
Inflation 3%
Dividends 2%
Capital Gain 5%
Total 10%

Expecting more of the same.

Cumulative returns dipped to about 9% during 2008 crash and was more than 15% during 90's.

I'm going with history but the future could be anything.

Based on Shiller data

 

[audreyh1]

A correction is a 10% sell off in the market from a (recent) peak.

A bear market requires a 20% sell off, so anything between 10 and 20% sell off is usually called a correction.

 

[RetireAge50]

Agreed, but I guess my point was we do not need a correction as stocks are not currently overvalued (IMO).

 

[seraphim]

Most analysts I read say stocks are over valued, but not much. Today's .9% drop surprised me a bit. I can't even figure what the impetus was, unless a lot of investors took the opportunity to harvest some of last year's profits for the new tax year. M* generally provides some clues but not tonight. I'm not expecting not much from 2014 returns, and we're about due for a year of negative returns. I don't expect it to be this year, but conceivably so. I think the OPs supposition a bit optimistic, to say the least. But I understand solar flares from some far off galaxy are screwing with crystal ball reception here on Earth...

 

[calmloki]

Check to see if Brittany forgot her drawers while exiting a car again - pretty sure that was the determining factor for the market jumping up (or falling) at some point in the past.

 

[audreyh1]

Agreed, but I guess my point was we do not need a correction as stocks are not currently overvalued (IMO).

Corrections can occur at any time and aren't necessarily caused by (over)valuation. They are most likely to be caused by "external events".

 

[audreyh1]

Most analysts I read say stocks are over valued, but not much. Today's .9% drop surprised me a bit. I can't even figure what the impetus was, unless a lot of investors took the opportunity to harvest some of last year's profits for the new tax year. M* generally provides some clues but not tonight. I'm not expecting not much from 2014 returns, and we're about due for a year of negative returns. I don't expect it to be this year, but conceivably so. I think the OPs supposition a bit optimistic, to say the least. But I understand solar flares from some far off galaxy are screwing with crystal ball reception here on Earth...

Exactly - they were just waiting for the new tax year to take profits!

 

[donheff]

Well, I am not counting on old normal unless it happens. If we get through another decade without a black swan many of us conservative SWR practitioners will be in good enough shape to seriously splurge. If so we can expect some threads asking about best approaches to take some gains off the table.

 

[Islandtraveler]

Today will be the same as yesterday only different.

 

[Sittingduck]

Corrections can occur at any time and aren't necessarily caused by (over)valuation. They are most likely to be caused by "external events".

Exactly. Anybody remember Greece? It is stuff no one is paying attention to now that will be the greatest factor influencing the course of the market over the coming year(s). Being over or undersold, or just right as Little Red would say, - not such a big thing in my opinion.