It looks like we are about to experience the first correction of 2021. How long (a day… a week… a month) and how deep (2%, 5%, 10% drop) will it be? Well that’s the $1M question. The economic fundamentals have not changed since the beginning of the pandemic, and we have not started to see the full effects of the Fed’s monetary policy. So this correction is likely due to good old fashioned profit taking.
Remember, 2020 was a great year for the markets. The NASDAQ was up over 43%. Since the average annual return is roughly 9%, it would be reasonable to expect a correction soon.
I would expect the correction would happen over the next few weeks, and hopefully it won’t be too deep or last too long. So review your positions and sell rules; you might have to sell something to preserve capital. Also update your buy list. There are going to be some bargains coming!
Quant For The Masses 