What is a stock market correction?

A correction is generally agreed to be a 10% to 20% drop in value from a recent peak. Corrections can happen to the S&P 500, a commodity index or even shares of your favorite tech company. When the stock market keeps rising steadily for an extended period, there comes a point when the talking heads on television start forecasting a correction.

Can a market correction withstand a surprise correction?

Market corrections can be viewed as a healthy pullback between the market index continues its uptrend. Given the inability to accurately predict a market correction, it is important to ensure that your investment portfolio is best positioned to withstand a surprise correction.

Should you leave your stocks alone during a stock market correction?

With a risk- and age-appropriate asset mix, you can leave your stocks alone during a correction, allowing them to recover while you rely on other assets until the upturn. Corrections are a normal part of the cycle of markets, and the best thing you can do during a stock market correction is to stay the course.

What does a 'correction' mean?

What does a "correction" mean, what's likely to happen next and what can investors do now? When a stock index falls more than 10% from a recent high, it is often said to have entered "correction" territory. That's a fairly neutral term for what can be an unpleasant experience to many investors.