Looking at market corrections over the years with Wealth E&P
July 19, 2021
Welcome to Wealth Enhancement & Preservation’s Market Minute, where we get to update you on everything that happened in the financial markets this past week.
We experienced another rough week in the markets last week, with all three indices down. It was the first time since February that we saw back-to-back declining weeks in the indices.
As you can see in the graph above, the DOW was down the least at about 0.5%, the NASDAQ was down almost 2%, and our Equity Income portfolio actually showed a gain for the week. However, I want to put these corrections in perspective and compare that to a market crash.
What I'm showing you here is: year-to-year, going back to 1980, on average we saw a 14% decline in a year, even though the markets are up in the long-term trend. If you look at 2009 and 2010, intra-year, the market was down 28% and 16%. However, on a calendar year, they ended up at 23% and 13%.
It's very normal to see these corrections intra-year that come and go fairly quickly, so if you're trying to trade out of them, you tend to capture a decline and miss the quick rebound. So, we're not really looking to identify these and get out of the way of a correction. A crash is what we're using our indicators for, in that we want to get out of the way of those 20, 30, 40, 50, and 60% declines.
Right now our indicators still point positive, even though it appears we are in the midst of a correction right now. It's a little bit uncomfortable, but for now we're holding tight. That's what the indicators are telling us to do.
Over the next few weeks, you're also going to hear from some of my partners: Jake Sanders, Armand Glassman, and Helen “Cokie” Cox. I look forward to hearing from them and for you all to hear their perspective on the markets, too.
If you have any questions for us, if you want a risk profile, or if you would like a retirement projection, please feel free to reach out or visit www.wealthep.com. Otherwise, stay tuned for our next Market Minute next week!
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