Broker Check


We Are Due for a Market Correction

| October 09, 2017

What does that mean? That was the opening comment made by well-known CFA Jeff Kleintop at a recent advisor conference – and his outlook on the markets may surprise you:

Did you know that every major economy – which, by the way, totals 45 economies - is growing for the first time in a decade?

Did you know U.S. company earnings are still consistently growing?

Did you know the yield curve experienced an inversion preceding every recession in the last 50 years? In other words, short-term bonds had higher interest rates than long-term bonds. We are nowhere near this today and the Fed is now saying they don’t plan to change this anytime soon.

Did you know that a bubble is technically defined by growth of 1,000% over a 10 year period?

Did you know that a bubble only affects the market to the extent it is embedded in the economic system? Sorry, Bitcoin.

Did you know that internet retailers only make up 6-10% of the market today compared to the .com bubble where 40% of the market was tech stocks? Maybe Amazon isn’t conquering the world quite yet.

Did you know student loan debt is not levered, unlike housing debt?

Did you know Asia’s “Singles Day” last November experienced five times the spending on Alibaba than the U.S. did entirely during Black Friday? Incidentally, this was their first year.

Did you know that a political move can take years or even decades to make an impact on an economy? The 2008 credit crisis was the result of legislation that passed under Bill Clinton’s administration.

Did you know that most of world’s major stock markets experienced a correction in 2015, 2016, or both years?

So, what does it mean that we are “due for a correction?” Perhaps this just might be the most googled question for 2017. Frankly there is no crystal ball when it comes to investing, but there is one thing we know for certain: a correction will occur at some point. It is part of the economic cycle and it is inevitable. The question for today is, is do you have a plan in place for when it does?