Market Correction

Economics

A market correction is a stock market decline of 10-19% from a recent peak — distinguished from a bear market (20%+). Corrections are common: the S&P 500 has experienced 30+ corrections since World War II. Average correction: 14% decline lasting 4 months, followed by full recovery in 4 months. Most corrections don't become bear markets. Triggers: profit-taking after strong gains, geopolitical events, economic surprises, valuation concerns. For long-term investors, corrections are opportunities — historically the best times to add to positions. Reacting to corrections by selling typically harms long-term returns. Corrections are healthy market mechanisms that reset valuations.