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Correction or Contraction?

| August 28, 2015
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The last few weeks have seen an increase in volatility in the global stock markets. But the question is – is it a correction which is a healthy and natural part of a bull market or is it a contraction which is an unhealthy leading indicator of serious economic problems and the start of a bear market? 

Correction. 

It does appear to us at this time that it is a correction. As stated above, a correction is a healthy and natural part of a bull market. Corrections have historically happened around every 18 months. This one is long overdue as it has been over four years since the last one. Since the bottom of the last bear market on March 9, 2009, the major U.S. indices have moved up even through various times of extreme volatility. This appears to be just another volatile moment in the current bull market. 

As of this Monday morning writing, the markets have reversed considerably off the initial lows as bargain buying has taken over. 

What to do next. 

There is no doubt that the market volatility as of late is downright “scary.” It could go lower or it could go higher, no one knows for sure. The loudest voices from the pundits usually turn out to be the wrong voices to listen to. 

We strongly believe in avoiding the noise and paying attention to the basic economic facts, our strategy of broad diversification, our belief that portfolios are appropriate to our individual clients’ financial and retirement plans, and that while market volatility is “scary” it has no long term impact on life plans. 

Your Dorion-Gray Team 

Dorion-Gray Retirement Planning, Inc. is located at 2602 IL Route 176, Crystal Lake IL. 60014. Securities offered through Securities America, Inc. Member FINRA/SIPC. Advisory Services offered through Securities America Advisors, Inc. Dorion-Gray is not affiliated with Securities America companies. Diversification seeks to reduce the volatility of a portfolio by investing in a variety of asset classes. Neither asset allocation nor diversification guarantee against market loss or greater or more consistent returns. 

© 2013. Dorion-Gray Financial Services, Inc.

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