Correction, Are we there yet?

[latexman]

S&P 500

4304.76 on 2/22/2022
4796.56 on 1/3/2022

4304.76/4796.56 = 0.8975 < 0.9

Are we officially in a correction now?

 

[kgtest]

Yes. And in fact my portfolio particularly is getting close to a bear market status. I am down over 10% for almost 2 months straight now, heavy into the Nasdaq equities with over 60% of the portfolio in MGK/AAPL.

Time to load up the dry powder and get ready to buy.

 

[OldShooter]

... Are we officially in a correction now?

Who is the "official" and why is their definition of a "correction" relevant to anything?

I think the notion of a "correction" is an artifact of technical analysis, which has been debunked every time it has been examined.

 

[W2R]

Who is the "official" and why is their definition of a "correction" relevant to anything?

+1

Doesn't matter to me. With patient "buy and hold" investment practices with long term results in mind, I don't have to change what I do depending on which way the wind is blowing. I like that.

 

[latexman]

Who is the "official" and why is their definition of a "correction" relevant to anything?

I think the notion of a "correction" is an artifact of technical analysis, which has been debunked every time it has been examined.

Obviously not you, right?

 

[skyking1]

+1

Doesn't matter to me. With patient "buy and hold" investment practices with long term results in mind, I don't have to change what I do depending on which way the wind is blowing. I like that.

Me too. Thank you Warren Buffett.

 

[NW-Bound]

A market correction is defined as 10% down from the most recent high. And of course, we are past that point.

A bear market is defined as 20% down from the most recent high. We may get there or not, time will tell. But the definition is there.

 

[aja8888]

Bear bottom indicators....or really End of Bear

A bell will be rung on Wall Street when the official Bear has been seen and his shadow covers the carcass of the Bull that he just ate.

Look for gleaming eyes of pretty blond "analysts" on CNBC interviewing "Important People" who are still shorting AMC and also for Cramer to announce that everyone needs to sell EVERYTHING IMMEDIATELY since the doom and gloom monsters have entered his cave.

Once you get those three events coming together, start buying like a madman.

 

[Markola]

^^^^ I don’t have cable TV but my foolproof investment indicator is to visit a magazine rack to see what the Kiplinger’s and Money Magazine covers are screaming at me to do to protect my portfolio from X,Y,Z crisis. When the exact opposite approach soon proves correct, I celebrate by continuing to do exactly nothing.

 

[ExFlyBoy5]

Look for gleaming eyes of pretty blond "analysts" on CNBC interviewing "Important People" who are still shorting AMC and also for Cramer to announce that everyone needs to sell EVERYTHING IMMEDIATELY since the doom and gloom monsters have entered his cave.

Sorry, but Cramer isn't very pretty. I will say, he is great in telling his viewers what stocks they should short.

 

[W2R]

A market correction is defined as 10% down from the most recent high. And of course, we are past that point.

A bear market is defined as 20% down from the most recent high. We may get there or not, time will tell. But the definition is there.

Well, I don't know if we'll get there but the market has been dropping like a rock at times, today! I am not going to actually DO anything, but I think I'll change over to my bear avatar just in case. That ought to scare away the bear.

 

[Palmtree]

I'm not looking to invest dry powder but if we reach bear territory, I'm planning on doing my Roth conversion for 2022

 

[street]

I'm not looking to invest dry powder but if we reach bear territory, I'm planning on doing my Roth conversion for 2022

I have not done any Roth conversion but plan to do my first one in 2022. That would be a good idea to do mine also if market is down. Thanks

 

[CardsFan]

I'm not looking to invest dry powder but if we reach bear territory, I'm planning on doing my Roth conversion for 2022

You read my mind. And if we get a HUGE drop, I might consider a one time mega conversion, IRMAA be damned.

 

[teejayevans]

Given current world events…no, we’re not there yet.

 

[target2019]

We were in a market correction. Now world events are accelerating the turn downward.

I tend to believe Fidelity's analysis of economic cycles. Looking at this picture I can only wonder whether or not this regional conflict will shorten the next phave and leave us at full-on recession much sooner than we imagined. https://institutional.fidelity.com/app/literature/item/9905106.html

 

[corn18]

The markets are not the economy. There have been many corrections and bears without a recession.

 

[target2019]

The markets are not the economy. There have been many corrections and bears without a recession.

True. The stock market is not the economy. But...they are not disconnected.

In many cases most of the pain is felt before the recession actually begins. We measured the S&P 500 price performance in various periods approaching recessions and found the six months just before to be a bad period for equities. This obviously supports the view that equity markets are a bit more forward looking especially compared to economic data which is often a bit backward looking.

https://www.seeitmarket.com/what-history-says-about-recessions-and-market-returns-17861/

 

[corn18]

Keep an eye on unemployment. That is a better indicator of a coming recession than the markets.

 

[intent]

I'm not looking to invest dry powder but if we reach bear territory, I'm planning on doing my Roth conversion for 2022

I've read similar posts before, but not during a time when I was actually making Roth conversions, so I've never dug into the reasoning as to why it's better to convert when the market is down.

Could you (or anyone) explain, or point me to a primer, as to why down markets are a good time to convert to Roth?

 

[Car-Guy]

About 10% of my dry powder will likely be fired today. I'll try to resist the temptation to use more since tomorrow is another day...

 

[eytonxav]

I think of corrections as not being influenced by geopolitical events like an invasion. I am not going to do anything at the moment, as I am not very good at catching a falling knife by using dry powder. Now if China learned anything from Putin, a much more serious event could be on the horizon. What would the impact be on Apple, pharma, rare earths, chip tech, etc that are highly China dependent if Taiwan was invaded? That is a scary thought.

 

[SecondCor521]

I've read similar posts before, but not during a time when I was actually making Roth conversions, so I've never dug into the reasoning as to why it's better to convert when the market is down.

Could you (or anyone) explain, or point me to a primer, as to why down markets are a good time to convert to Roth?

A person pays taxes on the dollar value of the conversion. Lower stock prices mean more shares can be converted for the same tax cost.

The hope is that a stock goes from - for example - $40 a share to $20 a share, gets Roth converted, then goes back up to $40 a share. The net result is that the $20 rebound is tax free rather than tax-deferred. Rather than paying taxes on $40, a person pays taxes on $20.

 

[latexman]

How people feel affects the markets and economy. And, in that order, with the markets being easier and faster to change than the economy.

4225.5 -----------> 12% drop from nearest peak

Yes, we are firmly there, and now be on the lookout for . . . the bear!

 

[Sue J]

^^^^ I don’t have cable TV but my foolproof investment indicator is to visit a magazine rack to see what the Kiplinger’s and Money Magazine covers are screaming at me to do to protect my portfolio from X,Y,Z crisis. When the exact opposite approach soon proves correct, I celebrate by continuing to do exactly nothing.

Money magazine stopped their print edition in 2019. That was one of my favorites to get from the library.