There’s nothing like some furious stock market swings to tease average investors with thoughts of “How do I make money on this?” Sounds tempting, but most professional investors will warn you not to try this at home. Following are several basics to consider about this current volatility. People are calling the recent stock market volatility a correction. What is a correction? • A correction is generally considered a 10 percent or more decline from the highest price of a group of stocks such as the Dow Jones industrial average or even an individual stock such as Apple. A decline of 20 percent or more from a high is considered a bear market. Corrections signal that the equity, or stock, was overvalued. So the market is “correcting” the price to reflect a more accurate value, also referred to as fair value. However, a correction doesn’t necessarily bring a stock or bond’s price to fair value. Value is in the eye of the beholder. Should I … [Read more...] about The stock market is going bonkers. Here’s what investors should know.
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It's time to pop a Maalox.Blame the plunging Dow. The blue-chip stock average is trying to make a habit of daily 1,000-point dives. This past week it briefly fell more than 10% from its January all-time high, a swift sell-off that has investors on edge.Wall Street pros say that such a drop, dubbed a "correction," is normal. They say that they are healthy. That they flush the froth and irrational exuberance out of overheated markets.All true.But that doesn't mean these downturns aren't worrisome events that cause investors to wonder if their money is safe. "Investors are feeling increasingly nervous," says Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis.But an emotional investor isn't an effective one.Panic isn't a financial strategy. Corrections don't mean the Dow is going to zero. In fact, periodic drops of 10% aren't all bad for investors, especially those with long-term financial goals, investment pros … [Read more...] about 401(k) investors stock market “correction” survival guide
James Royal, Ph.D., NerdWallet Published 12:45 pm, Friday, February 9, 2018 This article was first published on NerdWallet.com. News that the Dow Jones Industrial Average is down several hundred points sends shivers down the spine of even the most weathered investor. Such drops, while infrequent, can be scary because it’s impossible to predict how severe or long-lasting losses will be. And even if you trust the market will eventually rebound (as it always has), it’s hard to watch the value of your investments shrink before your eyes. In the immediate term, people will argue about what to call it — a crash? A correction? Leave the vernacular to others, and instead understand what’s causing the market to fall. This knowledge may not bring your money back right away, but it could help you prepare for the market’s next move up or take advantage of lower stock prices in the meantime. Defining a drop in the stock market Business Channel Now … [Read more...] about How to Tell a Stock Market Correction From a Crash
By Patrick May | [email protected] | Bay Area News Group PUBLISHED: February 9, 2018 at 10:01 am | UPDATED: February 9, 2018 at 10:19 am It’s official: thanks to this past week of jaw-dropping declines, the stock market is now in a correction. It’s a strange word, correction. It’s both shocking, suggesting a sobering smackdown of equities, and at the same time comforting in a way, because to ”correct” something means to fix it, to make it better. Either way, with both the Dow Jones industrial average and the more-important Standard & Poor’s 500 index plunging off their historic highs, we now find ourselves in correction territory, destined to wait things out and see if stocks fall further still or get ”corrected” and lift us back toward the irrational exuberance we were all approaching just two weeks ago. Here’s a primer: What is a stock market correction? A “correction” is a Wall Street term for when an … [Read more...] about A primer on stock-market corrections
It's official: All three of the major U.S. stock indexes are in correction territory, if rounded to the closest whole number. Traditionally, a stock market correction is defined as a drop from a recent high of 10%, or more.Since hitting their all-time highs, the Dow Jones Industrial Average (DJINDICES: ^DJI), Nasdaq Composite (NASDAQINDEX: ^IXIC), and broad-based S&P 500 (SNPINDEX: ^GSPC) have all fallen 10%. The bulk of these losses have occurred since the previous Friday, with the Dow Jones dropping 666 points, 1,175 points, and 1,033 points in three of the past five sessions.What's riled the markets, you ask? Part of the problem is the expectation that the U.S. economy is heating up. Preliminary forecasts from the Atlanta Federal Reserve suggest that the U.S. economy could grow by 5.4% during the first quarter. Such strong growth could push inflation figures higher and coerce the Federal Reserve to get more aggressive with hiking lending rates.We've also been … [Read more...] about 5 things to know about a stock market correction