When the markets are trending downward, a number of words, including correction, downturn, and bear market, are frequently used
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While it's not always a good idea to get too engrossed in the daily swings of the stock market, keeping an eye out for larger trends is a healthy habit.
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In order to determine the precise meaning of this statement, we'll concentrate primarily on a market correction.
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We immediately run into a challenge. Unfortunately, there isn't really a definition that is agreed by everyone for what a correction is
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But most people would define a market correction as a down of more than 10% but under 20% from a recent peak in any significant stock index
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A market correction can last for both short and long periods of time, ranging from a few days to many years
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The same variables that affect a stock's price individually might also affect the market by causing a correction
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It's common to mistake a market correction for a bear market. A market loss of more than 20% is referred to as a bear market
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Bear markets are the outcome of deeper problems that have the potential to endure for a long time; corrections frequently include more recent developments.