The Flinchum File

Thoughtful Economic Analysis and Existential Opinions
Subscribe to the Flinchum File
View Archives

Asking the Unknowable

10/16/2014

For well over a year, I’ve been writing that stock market corrections of 10% or more are perfectly normal in the short run and even healthy for the stock market in the long run.  I’ve also written that the longer we go between 10% corrections, the more likely it will be a 15% correction, and we are almost two years overdue for a correction.

I expect this correction still has legs to run.  (The S&P is down 8% at this point.  Small cap stocks are already down 11.6%)  This is a fairly normal correction, reflecting slowing global growth, not a global financial crisis.  The sky is NOT falling.  Buying opportunities are coming up!

Still, this correction is more interesting than a plain vanilla correction, because nobody knows the emotional impact of Ebola on investors.  Instead of a normal 10-15% correction, does the fear of Ebola guarantee the correction will be 15-20%.  Nobody knows, but it happened at a very unfortunate time, compounding a normal correction.

Since you don’t have a choice, just enjoy the ride down, secure in the knowledge there will be a ride back up.

We are a fee-only advisor providing best interest fiduciary services to clients
in Chesapeake, Newport News, Norfolk, Suffolk, Virginia Beach, Williamsburg, and the surrounding areas of Hampton Roads.

CONTACT BAY CAPITAL ADVISORSWe Will Respond Promptly

Contact Us Bottom