Has the stock market moved too far, too fast in 2021? I have shared with many of you that the market moves backward 30% of the time. The stock market does not go up in a straight line. Even while in the midst of a bull market, like the one we are currently in, there is always a chance for pullbacks and corrections. Some more information about the stock markets historical movements…pullbacks (up to a 10.00% decline in price from the most recent high) and corrections (10.00% to 19.99% sell-off ) are considered to be healthy and normal occurrences for the market. Data indicates that there have been 38 declines of at least 10% in the S&P 500 Index since 1950, according to The Motley Fool. That equates to a correction every 1.87 years, on average, with an average duration of about six months.
There is plenty of liquidity to drive stock prices higher without a significant correction. M2 is up by an unprecedented $4.2 trillion y/y through February. Furthermore, over the past 12 months through February, personal saving totaled a record-shattering $3.1 trillion. All that occurred before the third round of relief checks ($1,400 per eligible person) was sent by the Treasury to over 250 million Americans since mid-March.
The academic studies won a Nobel Prize for the conclusion that markets are random and no can predict the direction nor timing of corrections. Plan ahead for corrections is one of the high value roles of the 360° Family Office. We also offer comprehensive reviews (aka 2nd opinion) of portfolios and lifetime income structures that include analysis and actionable recommendations.
You would want this for people you love so let’s talk about who you love and how we can support them. Standing by.