Market Correction
A market correction is a decline of at least 10% in a stock index, such as the S&P 500, from its most recent peak. It is a normal part of the stock market cycle and is often seen as an opportunity to buy stocks at a lower price. Corrections are typically short-term events, lasting anywhere from a few days to a few months. They are usually followed by a period of recovery, where the market returns to its previous highs.
History of Market Corrections
Market corrections have been a part of the stock market since its inception. The first recorded market correction occurred in 1720, when the South Sea Bubble burst and the London Stock Exchange crashed. Since then, there have been numerous corrections, including the Wall Street Crash of 1929, the Black Monday crash of 1987, and the Dot-com bubble of 2000. Each of these corrections had a significant impact on the stock market and the economy as a whole.
Comparison of Market Corrections
| Event | Year | Decline (%) |
|---|---|---|
| South Sea Bubble | 1720 | 50 |
| Wall Street Crash | 1929 | 89 |
| Black Monday | 1987 | 22 |
| Dot-com Bubble | 2000 | 49 |
Summary
A market correction is a decline of at least 10% in a stock index from its most recent peak. It is a normal part of the stock market cycle and is often seen as an opportunity to buy stocks at a lower price. Corrections have been a part of the stock market since its inception, with some of the most notable being the South Sea Bubble, the Wall Street Crash, the Black Monday crash, and the Dot-com bubble. For more information on market corrections, visit websites such as Investopedia, The Balance, and MarketWatch.
See Also
- Bear Market
- Bull Market
- Stock Market Crash
- Volatility
- Risk Management
- Technical Analysis
- Fundamental Analysis
- Diversification
- Portfolio Management
- Market Risk
