{"id":41496,"date":"2018-12-10T09:16:30","date_gmt":"2018-12-10T14:16:30","guid":{"rendered":"https:\/\/olduvai.ca\/?p=41496"},"modified":"2018-12-10T09:16:30","modified_gmt":"2018-12-10T14:16:30","slug":"why-another-50-correction-is-possible","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=41496","title":{"rendered":"Why Another 50% Correction Is Possible"},"content":{"rendered":"

Why Another 50% Correction Is Possible<\/a><\/h3>\n
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All of sudden\u2026.volatility.<\/p>\n

Well, that is what it seems like anyway after several years of a steady grind higher in the markets. However, despite the pickup in volatility, the breaks of previous bullish trends, and a reversal in Central Bank policy, it is still widely believed that bear markets have become a relic of the past.<\/strong><\/p>\n

Now, I am not talking about a 20% correction type bear market. I am talking about a devastating, blood-letting, retirement crushing, \u201cI am never investing again,\u201d<\/em> type decline of 40%, 50%, or more.<\/p>\n

I know. I know.<\/p>\n

It\u2019s the \u201cdoom-and-gloom\u201d<\/em> speech to try to scare investors into hiding in cash.<\/p>\n

But that is NOT the point of this missive.<\/strong><\/p>\n

While we have been carrying a much higher weighting in cash over the last several months, we also still have a healthy dose of equity related investments.<\/p>\n

Why? Because the longer-term trends still remain bullish as shown below. (Note: The market did break the bullish trend with a near 20% correction in 2016, but was bailed out by massive interventions from the ECB, BOE, and BOJ.)<\/em><\/p>\n

\"\"<\/p>\n

Now, you will note that I keep saying a 20% \u201ccorrection.\u201d<\/em>\u00a0Of course, Wall Street classifies a bear market as a decline of 20% or more. However, as I noted recently:<\/a><\/p>\n

\u201cDuring a bull market, prices trade above the long-term moving average. However, when the trend changes to a\u00a0bear market\u00a0prices trade below that moving average.\u00a0This is shown in the chart below which compares the market to the 75-week moving average. During \u2018bullish trends\u2019\u00a0the market tends to trade above the long-term moving average and below it during \u2018bearish trends.\u2019\u201d<\/em><\/p><\/blockquote>\n

\"\"<\/p>\n

In other words, at least for me, it is the overall TREND of the market which determines a bull or bear market. Currently, that trend is still rising.\u00a0But such will not always be the case, and we may be in the process of the \u201ctrend change\u201d<\/em> now.<\/strong><\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Why Another 50% Correction Is Possible All of sudden\u2026.volatility. Well, that is what it seems like anyway after several years of a steady grind higher in the markets. However, despite the pickup in volatility, the breaks of previous bullish trends, and a reversal in Central Bank policy, it is still widely believed that bear markets […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[1849,8511,4148,15470],"class_list":["post-41496","post","type-post","status-publish","format-standard","hentry","category-economics","tag-financial-markets","tag-lance-roberts","tag-market-correction","tag-real-investment-advice"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/41496","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=41496"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/41496\/revisions"}],"predecessor-version":[{"id":41497,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/41496\/revisions\/41497"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=41496"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=41496"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=41496"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}