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What Turns Corrections Into Bear Markets

Published 2018-02-15, 12:10 p/m
Updated 2018-02-15, 12:10 p/m

Investing.com - Corrections may be considered healthy occurrences for stock markets, but there's always the chance that they are actually just the beginning of a bear market.
Unfortunately, for anxious investors there's no way of knowing if that will happen.
History, however, offers some grounds for hope.
First off, less than half of all corrections have turned into bear markets, meaning a decline of 20% from the market peak over a two-month period.
Secondly, most bear markets are associated with recessions, and there are no signs the economy is in trouble.
Only one of the dozen corrections since 1976 that were not accompanied by a recession evolved into a bear market.
Still, some analysts are worried trouble lies ahead because market declines as swift and severe as the recent one are quite rare. The last time stocks fell 10% in less than two weeks time was in 1928, and that was followed by the stock market crash of 1929 and the worst bear market in history.

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