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All a correction is, is the reverse side of a rally, either huge or small. In other words, a correction is a reverse movement, usually downward, in the price of an individual stock or bond.

In theory, corrections alter the share prices to their actual price or “support levels”. Essentially, it’s much simpler than that. Share prices go down because of trader reactions to anticipations of news, or the traders reactions to real news, and finally, traders taking profit. Thus, if this correction escalates, and becomes considerably more serious, then new investment opportunities will become more readily available.

Here’s a list of ten thoughts to reckon about doing, or to keep away from, during any corrections that might occur.

1. Your present portfolio should be keyed in toward your long-term goals and monetary objectives. You should resist the impulse to decrease your portfolio just because you foresee an additional fall in stock prices. Because then you would be attempting to time the market, which is virtually impossible, as you well know. Any decisions affecting your portfolio should have nothing to do with Stock Market expectations.

2. Considering past corrections, there has never been a correction thus far that has not turned out to be a buying chance. So this is point in time when you can start collecting a diverse group of high quality, dividend paying, companies when they have went lower down in price.

3. As I have said on numerous occasions, there are no crystal balls, and certainly no place for retrospection in an investment strategy. Buying too soon, in the right portfolio percentage, is nearly as vital to long-term investment success as selling ahead of time is, in rallies.

4.Now to take a look at the future.It is not possible to tell when a rally will arrive or how long it will persist. All you can do is delight in it while it lasts, as there are no guarantees as to how long it will last for.So, make hay while the sun shines.

5. As the correction continues, try to buy more slowly as opposed to more rapidly. Hope for a quick and sudden decline, but be ready for a protracted one just in case. Otherwise you could run out of cash well before the latest rally commences.

6.You ought to be out of cash whilst the market is still correcting. As long your cash flow continues unabated, the fluctuation in market value is just a perceptual issue.

7.Scrutinize your stock holdings in your portfolio for opportunities to average down on cost per share or to augment yield (on fixed income securities).

8. Ascertain new buying opportunities using a consistent set of rules. (Hopefully you have a preset trading plot in place by now?)

9. Continually analyze your portfolio’s operation against your asset allocation and investment goals. Keep them clearly in focus.

10.Just so long as everything is down, there is nothing really to be concerned about. Downgraded or non performing portfolio holdings should not be thrown away during general or group specific weakness. Unless of course, you don’t have the courage to get rid of them throughout rallies.

Corrections will continually vary in depth and duration, and both characteristics are clearly visible only in retrospection. The brief and deep ones are nearly always the most lucrative. Whereas the long and sluggish ones are a lot more demanding to cope with.

Continually bear in mind that Stock Market rallies need to be addressed quite swiftly and decisively and with no hindsight. Because amidst of all of the uncertainty, there is one irrefutable fact, there has never been a correction or rally that has not ultimately buckled to the next rally or correction that comes along.

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