{"id":61821,"date":"2022-02-08T08:46:09","date_gmt":"2022-02-08T13:46:09","guid":{"rendered":"https:\/\/olduvai.ca\/?p=61821"},"modified":"2022-02-08T08:46:09","modified_gmt":"2022-02-08T13:46:09","slug":"a-50-percent-decline-will-only-be-a-correction","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=61821","title":{"rendered":"A 50-Percent Decline Will Only Be A Correction"},"content":{"rendered":"

A 50-Percent Decline Will Only Be A Correction<\/a><\/h3>\n
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A 50-percent decline will only be a correction and not a bear market.<\/p>\n

I know. Right now, you are thinking, how could anyone suggest a 50-percent decline in the market is NOT a bear market. Logically you are correct. However, technically, we need an essential distinction between a\u00a0\u201ccorrection\u201d<\/em>\u00a0and a\u00a0\u201cbear market.\u201d<\/em><\/p>\n

In March 2020, the stock market declined a whopping 35% in a single month. It was a rapid and swift decline and, by all media accounts, was an \u201cofficial\u201d bear market. But, of course, with the massive interventions of the Federal Reserve, the reversal of that decline was equally swift. As YahooFinance pointed out at the time.<\/p>\n

\u201cThe S&P 500 set a new record high this week for the first time since Feb. 19, surging an eye-popping 51% from its March 23 closing low of 2,237 to a\u00a0closing high of 3,389 on Tuesday.\u00a0This represents the shortest bear market and third fastest bear-market recovery ever.\u201d<\/strong>\u00a0\u2013\u00a0Sam Ro<\/a><\/em><\/p><\/blockquote>\n

\"50-percent<\/a><\/figure>\n

However, as I discussed at the time, March 2020, much like the\u00a0\u201c1987 crash,\u201d<\/em>\u00a0was in actuality only a correction. To understand why March was not a\u00a0\u201cbear market,\u201d<\/em>\u00a0we must define the difference between an actual\u00a0\u201cbear market\u201d<\/em>\u00a0and a\u00a0\u201ccorrection.\u201d<\/em><\/p>\n

\"50-percent<\/a><\/figure>\n

Defining A Correction & A Bear Market<\/strong><\/h3>\n

Start with Sentiment Trader\u2019s insightful note following the 2020 recovery to new highs.<\/p>\n

\u201cThis ended its shortest bear market in history.\u00a0Using the completely arbitrary definition of a 20% decline from a multi-year high, it has taken the index only 110 days to cycle to a fresh high.<\/strong>\u00a0That\u2019s several months faster than the other fastest recoveries in 1967 and 1982.\u201d<\/em><\/p><\/blockquote>\n

Note their statement that the media\u2019s definition of a\u00a0\u201cbear market\u201d<\/em>\u00a0consisting of a 20% decline is\u00a0\u201ccompletely arbitrary.\u201d<\/em>\u00a0Given that price is nothing more than a reflection of the psychology\u00a0of market participants, using the 20% definition may not be accurate any longer.<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/article>\n","protected":false},"excerpt":{"rendered":"

A 50-Percent Decline Will Only Be A Correction A 50-percent decline will only be a correction and not a bear market. I know. Right now, you are thinking, how could anyone suggest a 50-percent decline in the market is NOT a bear market. Logically you are correct. However, technically, we need an essential distinction between […]<\/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-61821","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\/61821","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=61821"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/61821\/revisions"}],"predecessor-version":[{"id":61822,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/61821\/revisions\/61822"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=61821"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=61821"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=61821"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}