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What a REAL market correction would look like?

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Have a good Monday morning!

We thought we’d start your week off with some cheerful stuff.  What would a real stock market correction look like?

Over at Foxbusiness.com, Senior Stocks Editor Elizabeth MacDonald gives the historical perspective:

"Stocks historically have a correction every three years, and that the current bull market has lasted six." 

In considering this aging bull market, some sobering facts from John P. Hussman, Ph.D., of the Hussman Funds: “Recall that the 2000-2002 [market] collapse wiped out the entire total return of the S&P 500 in excess of Treasury bill returns, all the way back to May 1996."

Hussman adds: “The 2007-2009 collapse wiped out the entire total return of the S&P 500 in excess of Treasury bill returns, all the way back to June 1995. If the S&P 500 was to experience nothing but a run-of-the-mill 34% bear market decline over the coming three years, it will have underperformed Treasury bills for what would at that point be an 18-year period since 1999.”

She goes on to point out that stocks historically have a correction every three years, and that the current bull market has lasted six.  Further, she quotes various (rather negative) economists suggesting that the current run-up is something of a chimera, driven largely by the Fed’s loose monetary policy.

Her bottom line? 

In other words, when rates go up, the corporate zombies that should have gone bankrupt, but were kept alive by easy money, will start to march out of the woodwork.

Have a nice day.

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