MarketWatch: Opinion: This still looks like just a stock-market correction, not something worse

[Algernon Moncrieff]

Mark Hulbert

Consider the stock market’s decline over the first three months of the 2007-2009 financial crisis—the worst since the Great Depression. The S&P 500 fell 10.0% over the three months following its top on Oct. 9, 2007, barely even satisfying the semiofficial definition of a correction. The Dow fell 11.1%.

Or take the market’s decline over the first three months after the bursting of the internet bubble. The S&P 500 fell just 5.6%, and the Dow 6.4%.

Corrections, in contrast, have a different contrarian profile. Their sudden and abrupt nature strikes fear in investors’ hearts, thereby setting up the sentiment preconditions for the market to soon climb a Wall of Worry.

This is certainly consistent with what we’ve seen in recent months. As I wrote two weeks ago, rarely over the last 20 years have short-term stock market timers been more bearish than they are currently.

[Wellstone ruled]

1. The last

paragraph says volumes.

[PoindexterOglethorpe]

2. Had a conversation with my financial guy back on Friday,

and he pointed out that this current decline makes absolutely no sense because every single thing is declining, including companies and businesses that are making money.

What's going on is a great buying opportunity for those with cash.

[Algernon Moncrieff]

3. There are some things the market is unhappy with

...there's always something. Low unemployment = higher wages. Healthcare costs. Uncertainty.

My uninformed opinion: I think some of this selling prior to the end of the calendar year, and there will be repositioning in early 2019. I do think we will get bad retail news (read: disappointing Christmas) and more casualties in retail and commercial real estate.

More nefarious uninformed opinion: Big players are getting out anticipating "hard Brexit" - some to minimize exposure. Others to have cash-on-hand when the Pound plummets and massive buying opportunities present themselves.

[PoindexterOglethorpe]

4. You probably are at least partially right.

I suggested that perhaps some investors are simply taking profits. He didn't seem to think that was necessarily the case, but honestly couldn't explain what was going on.

He's been in the business for some thirty years now, so he's hardly a newbie. I've been working with him perhaps fifteen years. Six years ago he got me into two different annuities, as a way of having an assured income stream down the road. Earlier this month, when the payout reached a specific number, we filled out the paper work for me to start taking that income. Only about half of my money is in the annuities. I still have additional investments to weather this storm. But I'll tell ya, I am feel very comfortable at this point, because while like everyone I'd love it if the market were to always go up and never go down, it doesn't work that way.

Meanwhile, as someone else here has pointed out, markets periodically set new highs. The never set new lows.