Remember Redd Foxx’s TV character, Fred Sanford? Whenever a big surprise or reversal came along, Fred responded with a clutch of his heart while staggering and announcing, “…it’s the big one!” That’s my flashback when I listen to and read the media reaction during stock market corrections post-2008.
The chart (below) includes market history back to 1980. The red dots plot the steepest percentage market decline for each calendar year. The gray columns reflect how much the market increased or decreased for the entire calendar year. This graphic reminds us market corrections are common. Equally, more often than not, the stock market is up for the year despite enduring double-digit declines during the year.
Students of the market correctly note corrections are more common during the third quarter of each year. Of course, a correction could occur at any time. Having said that, both sentiment and market breadth indicate there is pent-up demand for stocks. More to come.