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Has COVID-19 Triggered a Market Correction?


It is beginning to seem that, by the hour, we are seeing and hearing news reports about another line of businesses temporarily shutting down or closing its doors. Parents and children across the globe are being forced to abruptly adjust to homeschooling education. Small businesses may be among the first to perish as we work through this pandemic.


Those who live check-to-check are on the brink of destruction. Corporations across the spectrum are improvising by the minute in a desperate attempt to continue serving its customers and clients at a high level while juggling their own household pandemic effects.


The stock market has been getting crushed and baby boomers who perhaps were overly exposed to the markets are freaking out about the retirement plans that they have spent a lifetime working towards.


In the midst of all this chaos, perhaps the most bizarre of them all is that for some odd reason, "toilet paper" has all of sudden become the hottest commodity on the market. Now, who would have seen that coming?


If you have read this far, let's briefly review the meaning of a market correction to ensure that you and I are on the same page before we delve into the COVID-19 triggers.



A correction occurs whenever there is a 10% decline from the most recent peak of an investment security. This correction can occur with individual investment securities such as stocks and bonds. It can also occur with an entire index comprised of a group of assets such as the S&P 500. A market correction can be short-lived or it may last for a prolonged period of time. This can equate to days, weeks, months, or longer.


The causes/triggers behind a market correction can vary as widely as the length of our mysterious Milky Way Galaxy.


In this particular case, as of March 2020, COVID-19 is the culprit/trigger behind the downward spiral of the markets.


The U.S. markets seemed to be unbothered by COVID-19 until the last week of February when the S&P 500 dropped by 11.5%, in which case, by definition, was indeed a market correction. It is hard to say which particular event or announcement triggered a downward trend in the markets.


The Bright Side Of Things


The good news is that the disciplined long-term oriented investor should be well-positioned to take advantage of this turmoil. On the other side of fearful panicked sell-offs in the markets is an opportunity for the investor who remains calm during the storms and thinks clearly when implementing his or her investment decisions.


There is a reason why the rich get richer each and every time the markets recover.


Now you as an investor have a critical decision to make.


Which side of the coin will you decide to be on when the dust settles?


The choice is yours.



If you valued this article please hit the 'like' button and also share via your Twitter, LinkedIn, Instagram, and Facebook social media platforms. I encourage you to join the conversation or ask questions in the comments section of this post.

Disclaimer: Hudson Wealth Management, LLC (HWM) is a FINRA registered investment adviser firm. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Before investing, consider your investment objectives and HWM's fee schedule. The information provided herein is for illustrative purposes only and does not constitute personalized investment advice, recommendations or solicitations to hold, buy or sell any investment or security of any kind. All images and return figures shown are for illustrative purposes only and are not actual customer or model returns. Past performance does not guarantee future results.


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