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Stock Market Correction Coming in 2011

Stock Market Correction Coming in 2011 - My computer mouse pad says: "If you can't run with the Big Dogs, stay on the porch."

As goofy as it may sound, the "Big Dogs" of the investment world pray that the stock market crashes from time to time. Since "crash" is a little strong, the preferred euphemism for a minor downdraft is "correction."

Why is a correction a good thing? Because it lowers stock market values temporarily and offers opportunities to buy stocks and mutual fund shares at reduced values. When we take advantage of this opportunity, we are reducing the average cost of all the shares we happen to own. This is especially true if we have some shares that we bought on rising markets and at their recent peaks.

If you're a 401(k) investor, automatically depositing money every pay period, you are lucky because you don't have to think. It's dangerous when investors begin to think. We are sorely tempted to try to second guess what the market will do in the immediate future.

By comparison, staying the course and continuing to invest in stock mutual funds through those corrections will have been far more rewarding in the end.

Stock Market Correction Coming in 2011
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