Perpetual Correction Calls

I will let you in on a little secret regarding the stock market: there is always (always) an impossible-to-predict correction on the horizon. Stocks would not have been able to generate such large returns for decades upon decades if every once in a while they didn’t make stock investors really uncomfortable. Temporary down stock markets are the price of admission.

I just ran a Google search for the year 2021 asking “is the stock market going to correct”. The results show 37 million links, with the very first page looking like this:

2021

Pretty ominous, right?

Just for fun, try the year 2016…..

2016

And let’s go back to 2010…..

2010

We could play this game forever folks. You could run these Google searches for different years over and over, going back way before 2010, and see similar results.

And sure, since 2010 the stock market has of course experienced a number of temporary down cycles. But really………how useful have over 11 years’ worth of perpetual “run for the hills!” correction calls been? Not very.

Since 2010, the Dow Jones Industrial Average has moved up from 9,775 to over 34,000.

That means $100,000 invested in the Dow in 2010 would be worth more than $350,000 today.

(source: Thomson, Inc.)

Back in the day, we only had 3 channels on TV, and no internet. If an investor felt worried, and they wanted confirmation of their worried feelings, they popped on 1 of those 3 channels hoping to get that dopamine hit telling them “Yep! See?! I am right to feel worried.” If those very limited 3 channels did not confirm their fears, they turned off the TV and went on with their lives.

Today, all that investor has to do is jump on the internet and easily find thousands of pages which will confirm their feelings. Even if doing so is not useful, or even hurtful.

Just because the information is available does not mean it is there to improve your life.

The views expressed herein are those of the author and do not necessarily reflect the views of Raymond James & Associates or its affiliates. All opinions are subject to change without notice. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Past performance is no guarantee of future results.

The Dow Jones Industrial Average is a price-weighted index that tracks 30 large, publicly-owned companies trading on the New York Stock Exchange and the NASDAQ.