Historical Perspective

Like I explained yesterday, perspective is necessary when the market is behaving badly. As of yesterday, the S&P was down 15.9%, the RUT was down 21%, the NASDAQ was down 18.2%, and the Dow was down 14.8%. These are major numbers and we haven't seen anything like them since 2002.

But what does it mean historically when the S&P is down 15%?

It has occurred 24 times since 1965. The average downturn is 22%. From the time it hits 15% down, it takes an average of 35 days to hit its ultimate low. That's the bad news.

Now, the good news -- The average rally after this type of correction up to the next peak in the market is 44%! My goodness! That is good news!

Keeping Things in Perspective

Hopefully, you have been using some form of technical analysis and stop losses to avoid huge losses in your portfolio. You cannot avoid all losses. In a market like this, it is impossible to avoid losses. All accounts will fall in value. The question is -- how much and is it less than the market average?

Keep your losses to a minimum. As of today, the S&P is down 15.9%.

To put that in its proper historical perspective and find out what it means, stay tuned...