Further to my earlier post about some possible reasons for the recent correction in stock markets globally, I found a thoughtful explanation.
Ben Carlson of A Wealth of Common Sense, who I follow pretty regularly, posted his thoughts yesterday on his site.
Basically he thinks there isn’t a simple and satisfying explanation of causes for the pullback now. He cautions investors that headlines tend to get blown out of proportion by financial news organizations.
He also makes the important point that anyone in the accumulation phase is now presented with an opportunity to buy good companies on sale.
Further, he predicts that this is not the beginning of a 2008-type crash. It is more likely a correction like we saw in the summer of 2015 (-12%) or the early part of 2016 (-13%).
Ben admits no one can predict what’s next:
The biggest thing to remember is that no one has a clue what’s going to happen next. Short-term market moves are controlled by human emotions, which are impossible to predict.
I couldn’t agree more.
That’s why I have done nothing during the correction and will monitor asset allocations until March 2018, when I reach my next self-imposed trading date. If stocks are still off their highs I may need to add to positions to remain at target weighting.