3 Vital Lessons From Stock Market Corrections

Motley Fool2022-02-25

After a lucrative bull market for many investors, the stock market is entering what many deem correction territory. A stock market correction happens when a stock falls by 10% or more from its recent ...

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Comments

Slowmopi
2022-02-27
Slowmopi
Ok
Tanyl
2022-02-26
Tanyl
Oh, that is a very good idea
winwin123
2022-02-26
winwin123
Yes, important to keep enough cash
Jazim
2022-02-26
Jazim
Good
Tiyenger
2022-02-26
Tiyenger
Good read to remind us of the fundamentals.
SPOT_ON
2022-02-26
SPOT_ON
Like

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A stock market correction happens when a stock falls by 10% or more from its recent ...</p>\n\n<a href=\"https://www.fool.com/investing/2022/02/25/3-vital-lessons-from-stock-market-corrections/\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"SH","symbol_name":"标普500反向ETF","start_time":0,"source_url":"https://www.fool.com/investing/2022/02/25/3-vital-lessons-from-stock-market-corrections/","article_id":"2214900005","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2214900005","pubTimestamp":1645801163,"sourceInfo":{"source_id":"fool_stock","name":"Motley Fool"},"weMediaInfo":null,"summary":"Focus on what really matters.","collect":0,"end_time":0,"defaultTopTitle":"fool.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"161125":"标普500","513500":"标普500ETF","SH":"标普500反向ETF","IVV":"标普500指数ETF","SSO":"两倍做多标普500ETF","BK4504":"桥水持仓","SDS":"两倍做空标普500ETF",".SPX":"S&P 500 Index","OEX":"标普100","SPY":"标普500ETF","UPRO":"三倍做多标普500ETF","BK4534":"瑞士信贷持仓","SPXU":"三倍做空标普500ETF","BK4559":"巴菲特持仓","OEF":"标普100指数ETF-iShares","BK4550":"红杉资本持仓"},"translate_title":"股市调整的3个重要教训","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"161125":0.6,"513500":0.6,"SPY":0.9,"IVV":0.6,"UPRO":0.6,"SSO":0.6,"SPXU":0.6,"SH":0.6,"SDS":0.6,"OEX":0.6,"OEF":0.6,".SPX":0.6,"ESmain":0.6},"content_text":"After a lucrative bull market for many investors, the stock market is entering what many deem correction territory. A stock market correction happens when a stock falls by 10% or more from its recent 52-week high, and that's exactly what has happened to the S&P 500, one of the most popular index funds that track the 500 largest U.S. companies.As the stock market enters correction territory, here are three vital lessons that can be learned.1. Bull markets don't last foreverInvestors often use long periods of consistent market moves to categorize it as either a bear market or a bull market. Bear markets are generally defined by a steady decline in stock prices, while bull markets are defined by a steady increase. In February and March 2020, during the early stages of the COVID-19 pandemic, stock prices plummeted, with the S&P 500 dropping more than 33% from its pre-pandemic peak.On March 20, 2020, the S&P 500 reached its lowest pandemic point, and from that point until Dec. 31, 2021, the stock market experienced what many would consider a bull market, with the S&P 500 increasing more than 106% from its March 2020 low point.If it's one thing that's been consistent through the history of the stock market, it's the fact that volatility is inevitable, and neither bear nor bull markets last forever, as evident by the most recent movements.2. Cash is an important assetWhile cash shouldn't be the bulk of your financial portfolio, it plays an important role and should be part of it. You should aim to have an emergency fund set aside -- preferably three to six months' worth of expenses -- but once that's accomplished, you shouldn't ignore the benefits cash can play within your brokerage account.As stock prices drop during stock market corrections, you can view this as a way to grab your favorite investments at a \"discount.\" If you were willing to invest in an asset at a certain price, and it drops below that, then it could be a chance to increase your holding and lower your cost basis.For example, let's imagine you purchased 10 shares of the Vanguard S&P 500 ETF (NYSEMKT:VOO) when it was priced at $439 on Jan. 4, 2022. When the price dropped to $394 on Feb. 22, 2022, instead of this being a time to be alarmed, you could have viewed it as a chance to grab more shares at a better bargain.On Jan. 4, your cost basis would've been $439 per share, but had you purchased 10 more shares on Feb. 22, your cost basis would've dropped to $416.50 -- which could increase your per-share profit whenever you decide to sell.However, the chance to increase your holdings at lower prices is only possible if you have cash readily available to use. If you don't have any nonemergency fund cash at your disposal, the only way to take advantage of these drops would be to sell some investments, which isn't usually the best idea.3. Long-term investors shouldn't be anxious over short-term movementsFocusing on the long term is a key to success for many investors. In the short term, you should try your best to not get too high on the highs or too low on the lows. An unrealized gain is an increase in the value of an investment you own but have not sold, and an unrealized loss is a decrease in the value of an investment you own but have not sold -- and that's a clear distinction. Your gains and losses only exist on paper until you decide to sell an investment.If you're investing in fundamentally sound companies and funds, unrealized losses shouldn't cause you to panic sell. Understand that volatility will never go away, and focus on your long-term financial goals.","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":9039141841,"gmtCreate":1645974606620,"gmtModify":1676534078815,"author":{"id":"3584052109735205","authorId":"3584052109735205","name":"Slowmopi","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3584052109735205","authorIdStr":"3584052109735205"},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9039141841","repostId":2214900005,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9039916182,"gmtCreate":1645880909853,"gmtModify":1676534072143,"author":{"id":"4087109808120260","authorId":"4087109808120260","name":"Tanyl","avatar":"https://static.tigerbbs.com/174329973340cf0f5b68791ee5b08afd","vip":1,"crmLevel":9,"crmLevelSwitch":1,"idStr":"4087109808120260","authorIdStr":"4087109808120260"},"htmlText":"Oh, that is a very good idea","listText":"Oh, that is a very good idea","text":"Oh, that is a very good idea","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9039916182","repostId":2214900005,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9039995945,"gmtCreate":1645870353412,"gmtModify":1676534071657,"author":{"id":"3581679671603726","authorId":"3581679671603726","name":"winwin123","avatar":"https://static.tigerbbs.com/052570f3ef4ae2e06d7b7ef9351e4ab5","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3581679671603726","authorIdStr":"3581679671603726"},"htmlText":"Yes, important to keep enough cash","listText":"Yes, important to keep enough cash","text":"Yes, important to keep enough cash","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9039995945","repostId":2214900005,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9039032549,"gmtCreate":1645839842189,"gmtModify":1676534069266,"author":{"id":"4091925166419540","authorId":"4091925166419540","name":"Jazim","avatar":"https://static.tigerbbs.com/85de7ecb80758afc3288fc8bb7e5ef27","vip":1,"crmLevel":5,"crmLevelSwitch":0,"idStr":"4091925166419540","authorIdStr":"4091925166419540"},"htmlText":"Good","listText":"Good","text":"Good","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9039032549","repostId":2214900005,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9039005374,"gmtCreate":1645836840871,"gmtModify":1676534068638,"author":{"id":"3581934394230212","authorId":"3581934394230212","name":"Tiyenger","avatar":"https://static.tigerbbs.com/19f86e7f2a2c2bdd786b78dfd45bd48b","vip":1,"hat":"https://static.tigerbbs.com/f84859c65fc2d7681e28f6b8e9b0535a","crmLevel":5,"crmLevelSwitch":0,"idStr":"3581934394230212","authorIdStr":"3581934394230212"},"htmlText":"Good read to remind us of the fundamentals.&nbsp;","listText":"Good read to remind us of the fundamentals.&nbsp;","text":"Good read to remind us of the fundamentals.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9039005374","repostId":2214900005,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9030785466,"gmtCreate":1645825419753,"gmtModify":1676534066951,"author":{"id":"3582922989777578","authorId":"3582922989777578","name":"SPOT_ON","avatar":"https://static.tigerbbs.com/080f029371339d9db26930961de6adb1","vip":1,"hat":"https://static.tigerbbs.com/a3dee1aa3a3a3c1814833a4d3f8a5669","crmLevel":4,"crmLevelSwitch":1,"idStr":"3582922989777578","authorIdStr":"3582922989777578"},"htmlText":"Like","listText":"Like","text":"Like","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9030785466","repostId":2214900005,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":119,"commentSize":11,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; 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