Tuesday, February 4, 2014

A Correction?

As I have reported recently, it is not unusual for the stock market to have a correction after a lengthy time on the rise. Yesterday we saw that a correction can still be painful. The stock market dropped a little over 2% yesterday, meaning that anyone in the market at that time lost money. Although you are a long-term investor, that is your money. A correction is usually about a 10% drop in the value of stocks. This usually sets the stage for another increase in value. A day like yesterday is generally followed by two to three days of the market rising before it again tests the downside. 
I believe that equity investments will bring us rewards in the future as the economy grows and energy becomes increasingly available.  The road to those rewards will be bumpy, such as what we saw yesterday.
Ed Mallon