“It’s tough to make predictions, especially about the future.” -Yogi Berra
The Nasdaq officially moved into correction territory, down more than 10% from the all-time high. It took only 15 trading days to do this, one of the fastest corrections ever. Interestingly, 2020 holds the two fastest corrections ever. Let’s say it one more time, good riddance 2020.
What does it mean? Well, as Yogi told us, predictions about the future are tough, but this could end up having the bulls smiling. “Yes, being down 10% in three weeks is a scary scenario for investors heavy in Nasdaq and technology names, but history might be on the bulls side here,” explained LPL Financial Chief Market Strategist Ryan Detrick. “In fact, looking at the previous fastest correction ever shows us that six months later the Nasdaq is up 23% on average and higher 9 of the previous 11 times.”
As the chart below displays, previous fast corrections tend to resolve higher (or even much higher) going out 3 to 12-months. This pullback no doubt feels uncomfortable and scary, but investors willing to use this correction as an opportunity very well could be rewarded down the road.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change. References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy. All index and market data from FactSet and MarketWatch. This Research material was prepared by LPL Financial, LLC. Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL affiliate, please note LPL makes no representation with respect to such entity.
- Not Insured by FDIC/NCUA or Any Other Government Agency
- Not Bank/Credit Union Guaranteed
- Not Bank/Credit Union Deposits or Obligations
- May Lose Value
For Public Use – Tracking 1-05120126