Time for a Correction?

The stock market’s recent troubles have many investors wondering if we are in for a correction, if not for something worse. A correction is defined as a drop of 10 percent, and since World War II, we have seen 27 of those. Since the stock market hit bottom in March of 2009, there have been three corrections. The most recent of these took place from April to September in 2011, when the Dow dropped by about 16%. 

If it gets down to a loss of 20 percent, that’s when it officially becomes a bear market. There have been 12 of those since 1945, and three of them since 2000. 

The average time between corrections since 1945 has been about 20 months. Market-watchers warn that it’s been closer to two and a half years since we last had one. The S&P is down about 7% since reaching its all-time high early this year.