Tips for a Market Correction
A market correction is defined as a 10 percent decline from the previous 52-week high and is generally considered a normal part of the market life cycle. At least one market correction has occurred in each bull market throughout the last 40 years.1
It’s important to recognize that a correction provides an opportunity to position your portfolio for higher future gains. One option is continuing to invest automatically, even during periods of declining prices. Remember, investing when prices drop means new contributions will buy more shares. 2
Once the market has recovered, see if the increase in shares has shifted the portfolio from your strategic asset allocation, in which case you may wish to consider rebalancing. 3
1 Kimberly Amadeo. The Balance. Aug. 7, 2018. “Stock Market Corrections Versus Crashes And How to Protect Yourself.” https://www.thebalance.com/stock-market-correction-3305863. Accessed Oct. 20, 2018.