Market Correction

Market Correction

On Friday Wall Street deflated with a mighty belch, as the Dow dropped over 500 points, the worst one-day loss since 2008. Overall there’s been a 10 percent drop from the May 19 peak, so it’s officially a “Market Correction.

Why? Some blame it on the fears about the instability of China’s economy, others on the EU and Greece, or the Fed, or the low price of oil and other commodities, or the Zodiac.

Frankly, we think that you’ve got to expect this kind of thing in mid-August, when senior brokerage partners are in Cap d’Antibes, Cape Cod, the Adirondacks and the coast of Maine. Juniors and interns are running the markets and the rest of civilization. Their panicky Twitter feeds just amplify their discomfort into sell-offs.

The market isn’t the economy and vice-versa, but now that pensions have become 401(k)s and the GOP wants to toss Social Security out onto Wall Street, there’s understandable concern amongst normal human beings. But steady on: There have been market corrections every 18 months since 1957.

More:

“This Week’s Market Sell-Off May Not Be Such a Bad Thing,” Neil Irwin, New York Times

“The August stock slide, explained,” Matthew Yglesias, Vox

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Short Link: http://wp.me/p6sb6-lWg

Image (“Market Correction, after Edvard Munch & Dow Jones”) by Mike Licht. Download a copy here. Creative Commons license; credit Mike Licht,NotionsCapital.com

Comments are welcome if they are on-topic, substantive, concise, and not boring or obscene. Comments may be edited for clarity and length.

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