📉 Great time to buy - 50 years of market corrections - Motley Fool 🃏

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“Stock market corrections are a great time to buy.”

50 years of corrections, and the one number that stands out

Despite these concerns, taking a step back and examining how the stock market has responded to corrections over the past five decades should help worried investors calm their nerves.

A table showing that more than 70% of corrections since 1968 last 104 or fewer days.
A table showing that more than 70% of corrections since 1968 last 104 or fewer days.503×719 11.2 KB

From Yardeni Research via Motley Fool.

As you can see from the data, which comes from Yardeni Research, there have been 29 corrections over the past 50 years, working out to one around every two years, on average. But what stands out the most about this data is the duration of these corrections. There are six instances where a correction lasted longer than 500 days, as highlighted in red; two instances where they lasted between 157 and 288 days, as noted in yellow; and 21 instances where they’ve been 104 days or shorter, as shown in green.

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Repost:

The Motley Fool CIO just emailed:

Think like an owner, not a trader.

We never get tired of saying this because it needs to be said. Even those who buy into our investing philosophy might need a reminder in times like these.

Act like an owner of your businesses, not a trader of them. We don’t trade tickers; we invest in companies — great companies with business models that we believe are transforming their industries and making a difference in the world. Our favorite companies have loyal customers, growing markets, and unique advantages over their competitors.

Yet stocks do indeed fall — sometimes dramatically — but they recover.

Looking at past data, corrections like this happen once every 12 to 18 months or so and last four to six months. It’s been more than a year since the last correction, so we’re not shocked to see one. In fact, we’re kind of on schedule.

The silver lining is that corrections tend to snap back within about four months, according to Goldman Sachs data. Furthermore, keep in mind that over time, stocks spend 3 times as much time going up as going down. We just need to get through the down days to make sure we experience the ups.

Stocks are volatile in the short term, but over the long term, returns are far more positive than negative.

During a single day, it’s a coin toss whether your stock goes up or down. Over a year, the odds improve so that two-thirds of the time you’ll win. Stretch that out to three or five or 10 years, and your chances to make money skyrocket. In fact, in almost 9 times out of 10 over the past 100 years, stocks make you money over any 10-year period.

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This was super helpful to read. Thanks

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