Do you think there will be a major correction in the stock market.
The stock market had a straight rise for the past 7 years. In my opinion there should be a sizeable correction to this market. I mean a 20 to 30% correction.
Answers
325 points
ISIStudios answered one year ago …
Well that's not true entirely - the market went through one of its worst crashes since the great depression for 3 solid years (2001 - 2003), but for the last 4 years it's been on a major bull run. However, if you really look at it we've only just gotten back to even (market crashed at 12,000 and we're just above 13,000 now) - that's a 4 year base building period. If nothing else we're poised for a little more base building and a potential multi-year bull market. Look at a long term chart of the Dow and you'll see what I mean.
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2703 points
MNSL answered one year ago …
There are signs that there will be major corrections on the way to one of the greatest bull markets in the history. For example we had big sell off in USA, India, China and
Australia and market crashed sometimes by 10%.Unlike past bull markets this time almost all the assets such as commodities, stocks and houses went up by more than 100% through out the world. Today we have unpredictable market situation and even with high interest rate and inflation still assets are going up. Some market players still make profits by picking correct shares through out the world. Whenever markets become too hot we can expect major corrections such as present Housing market crash. I think we can expect some major corrections at the end of next year even in commodity market and stock market. So it is better to put our money where companies make good turnover and profits. Also we will have good opportunity to pick good shares in the coming crash.
3127 points
EthanR answered one year ago …
There will always be corrections in markets. You can wait until there is a big correction before investing any money, but you could be waiting three or four years, and miss a large gain in the meantime. Another thing that tends to happen is that people wait for a correction to invest, but then when it comes, they are so afraid the correction will not end that they wait too long to get back in. As a result, instead of getting in 10% below the last market high, they get in maybe 4-5% below. Not really worth waiting a long time for the next correction just to save 4%! Dollar cost average your way in!
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MNSL answered one year ago …
Thank you. It is a good point. But some experienced and mature investors know when to enter the market and when to exit from the market. For example some of top investors invested money on houses and commodities in 2000 and sold their houses and some commodities in 2005 and 2006 through out the world. Don't you think it is better to watch what intelligent investors do before we invest?Probably they are waiting for some correction? Also they are very clever in identifying opportunities even in present market condition throughout the world.
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583 points
jillybeansisme answered one year ago …
Attempting to time the market is absurd and foolish. You will very rarely know the "bottom" or the "top". Instead:
find a trade you like for good reasons,
purchase the shares--but no more than 3-4% of your total portfolio net worth
have a mental stop loss of 20% of the highest price you've seen the stock go to while you own it,
sell half your shares if the stock doubles in price,
sell half again if it goes up 50% more,
let the remainder ride until you can't take it anymore!
While, in a taxable account, I feel it is best to buy and hold as long as possible, don't hold onto a trade for fear of paying taxes if the trade is no longer a good one. In a nontaxable account there isn't that issue, but remember commissions will cost you in total and compounded return.
Following this formula you won't get too hurt if a correction does happen. You have to stay disciplined and remember, just because you have a mental or real stop loss order doesn't mean the market won't trade right through it if it is volatile.
DISCIPLINE RULES!
Happy investing and have a Great '08!
Jill K.
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