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Dear Jag,
very much appreciated for the informative post.
Looking forward to read this kind of info in the future as well.

thank you

Thank a lot Jag jee. Sharing is caring. got it helpful.

Thanks for the info Jag ji. Appreciated. Half knowledge is always dangerous.

Dear Readers,

Joining forums related to share markets has been an interesting experience since the last several months. However, every now and then, we come across certain topics that simply needs revisiting. One of those words that have been flying around has been the big and scary word called "Correction". We have noticed that forum members use this word in a very casual yet colloquial manner. During college years, professors had always reminded us that a correction is generally a downturn in the market where the index or any underlying security falls 10-15% or more. Here, we notice from forum members as well as financial newspapers and online media outlets mentioning correction for even a minor 2-3% decline. We generally look for a break in the upward sloping trendline to confirm a market correction.

Hence, let us visit what some online resources tell us on this topic:

Investopedia: "A reverse movement, usually negative, of at least 10% in a stock, bond, commodity or index to adjust for an overvaluation. A correction has a shorter duration than a bear market or a recession, but it can be a precursor to either."

Investinganswers.com: A market correction refers to a price decline of at least 10% of any security or market index following a temporary upswing in market prices.

CNBC: What is a correction?
A correction is a decline or downward movement of a stock, or a bond, or a commodity or market index. The amount of the decline is at least 10 percent and a true correction exceeds that amount. In short, corrections are price declines that stop an upward trend.



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