Marketwatch put together an interesting doom and gloom article, talking about a 10-20% correction by the summer: http://www.marketwatch.com/story/10-reasons-us-stocks-may-see-a-10-20-correction-by-july-2015-02-23 There are always going to be arguments for such a pullback, though 20% does seem to be a bit extreme. Does anyone expect to see such a decline?
You're getting into bear market territory beyond 20%. A good hard selloff here and there is inevitable. As to when and how much, who knows? Some pretty smart people say very different things, such as: we're 5-6 years in to a 14 year bull market; or Dow @ 20k or 6k by this or that time. But I've long noticed that the smartest and the best aren't in the "prediction" business. One thing I learned long ago when reading reputable material or listening to reputable (or perhaps not) people is to differentiate between fact and opinion. Predictions about the broad market or this or that security or commodity or whatever are opinions - opinions that are often wrong. We had a correction right around 20% about 3.5 years ago, and a ~ 15% pullback about 5 years ago. I like to keep a fair amount of cash on hand and use reasonable hedges against more volatile long positions.
There are thousands of analysts out there, it is very easy to have any opinion at all and find dozens, if not hundreds of analysts who support your opinion. I am normally a very conservative person, but I think we are just at the beginning of a very long bull market in the USA. Becoming oil independent was a huge deal. And hopefully the Republicans will behave more in line with the tea party ( small gov´t ) rather than the fringes of their party. If they do, I think we have the potential to see gov´t behaving the same way it did when the Reps took control in 1994 with the contract for american, where they went all out to balance the budget and create surpluses. If that faction of the Reps take control, then we could have 10 years similar to what started in the mid 90s.
What a lot of these "doomsday" article writers or "experts" as they call themselves do is write this kind of stuff every 6 months. It's a great way for them to get readers since big changes like 20% is something that grabs attention. The real key however is them writing this stuff continuously, if they are wrong everyone forgets about it. But the one time they get it right (it's inevitable that these kinds of corrections do happen from time to time) they can make a big public deal about how amazing at predicting they are.
Ironic, I just came from reading an article about NFL scouts and analysts and how they repeatedly screw up draft picks, but then get paid the big bucks to give their opinion on this years draft class. We talked about this in another thread, but basically at any point in time, there are always a handful of reason to think a big correction is coming soon... but most of the time they are insignificant things that get swallowed up by bigger bull factors. My personal opinion is that we have at least 5 years of bull market without seeing any type of major pullback.
Well, I never believe what a lot of people write, some of tehm just come up with their own statistics just to get people to read their articles.
I'm always amazed at how often these type of articles are published. They're like broken clocks that are right twice a day or twice a decade in the case of the stock market. The editors of these sites and other various sources like CNBC are simply supplying entertainment, not usable information, but most people don't know this. The best approach is to avoid most of the financial infotainment and simply watch the price of the S&P 500 for example.
Yup. But journalism today isn't judged by who is right and who is wrong, it's judged by the amount of pageviews a particular article gets. As long as people keep opening these links, these kind of articles will continue to be published.
