7 Reminders During A Correction
To put things into perspective, in 2021 we didn’t have any major correction, just about 8 shallow pullback of about 5-8%. So when it might get uncomfortable with a correction but we’ve written something to help
7 Things To Remind Ourselves During A Market Correction:
As the market corrects months before the first rate hike, these are some things we might want to remind ourselves:
1. When market was up and we wanted to chase the price to buy a good company stock, now that prices have retraced, why are we fearful and running away? What has fundamentally changed?
2. Define your investment horizon. Remember, whenever you’re investing, it should be funds you don’t intend to spend in the next 4-5 years. And if this fund is for the long term then learn to endure pullback, corrections and crashes. Funds meant for short term usage shouldn’t be used to invest.
3. Huge gains are made during the pullbacks and volatility. Imagine if you got in around march 2020. =)
4. Going through a correction is one of the toughest things to do, with media outlet splashing doomsday news, things always feels like they’re going to worsen. Hold strong and believe in your conviction.
5. The benefit of having a long time horizon is that you don’t have to try to time the bottom when buying in a sell off. No one can time the bottom, if they could it’s probably luck or they’re lying.
6. Every sell off is a buying opportunity. From history, with every sell off, market moves higher. S&P is higher now as compared to 2020’s crash.
7. The reason for a sell off doesn’t really matter. There can be a thousand and one reason why market is selling off. Fed rate hike, inflation, coivd-19, political tension, Ukraine/Russia tension. In a grand scheme of things, these could be noise to the markets and markets will find ways to resolve it. Market could be throwing a tantrum, who knows?
As always, if you have any questions feel free to drop us a message.
From Kelwin & Roy
