So stocks have seen a couple of bad days in the past two weeks. At its worst, the S&P 500 fell 4.4 per cent off its high. This had strategist screaming “CORRECTION!”
A market correction is very typical and most would consider it healthy.
But Lazlo Birinyi has some interesting data for those who think a correction will never come.
But the key point to remember is that on average the S&P 500 has four corrections of at least 5% each year (without entering a 20% decline or bear market). And as we show below we are hard pressed to find a correlation between the number of declines per year and the eventual yearly results. We would note that there were six years with no correction which averaged a 27% gain.