2016 Market Correction - Amazon S3

[Pages:19]2016 Market Correction

What is going on and what to do about it

What is a market correction?

A price decline of 10% or more from a recent market high (peak).

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CurrenCt uCrroernretcCtioornreicntUioSnStocks

S&P500 stock index is down 10% for the year

The S&P 500 is a stock index that tracks 500 of the largest companies. Data as of Feb 2016

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CurrenMt aCrokerrteHcetioandwininUdSsStocks

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What corrections feel like!

Percentage Drop: 0% to 5% 5% to 10% 10% 20% 50% 80%

*Source: Josh Brown of The Reformed Broker Blog

Defined as: Pause Dip

Correction Bear Market

Crash Depression

Feels like: "whatever" "a return to normal" "nerve-wracking"

"panic" "prison riot" "pack up the kids"

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How often do 10% corrections happen?

Since 2010- there have been 13 Since 1980- there have been 21 Since 1950- there have been 41

Corrections are a necessary part of long term investing. They are why stocks have a higher rate or return over bonds.

Data provided by Factset.

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Largest decline in each year (Red Dot)

S&P 500 Return in given year

S&P 500 Decline per given year 7

Understanding the previous slide

For example: In 1980 the return for the stock market for the entire year was +26% Yet in1980 the stock market had a -17% decline during that year.

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