Stocks Typically See 4 'Corrections' A Year, But When They Don't...HOLY COW

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.

chart

Photo: Birinyi

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