Don't Get Me Wrong, We're In a Long-Awaited Correction. Now Embrace It.

Everyone is worried that this is another 2008 in the working. Everyone is also going to hate these words coming out of my mouth: I hope so. 

History has shown that long-term, secular bull markets occur when everyone has thrown in the towel on a certain investment, such as stocks, real estate, commodities, etc. That hasn't happened in the last two years for the long haul. Yes, it happened in March 2009 for certain groups of people, and hence, you saw a 100% rise in stocks over the next two years. But folks, we are in a very troubling economic and financial time right now. These problems are not solved overnight, and equity markets don't rebound the way they have over the last two years without making some sort of long correction, which very well could be happening right now. 

I sold 60% of my equities back in September 2010 thinking that was when the correction would happen, but we haven't even hit those levels yet in the last month with a 15%+ sell-off. Do I think we will get there? Yes, I do. Absolutely. We just had a major downgrade, and even if you're an "expert" who knows that this still means we can pay our bills, the stock market isn't made up of all experts. And even if it were, the experts were the same people who said, back in 1997-2000 that a company that had nothing more than a name attached to the word ".com" was worth hundreds of millions.

Stock markets will ebb and flow. We are just in a period of correction, which is needed in order to get to longer term growth that we will want to see. Trust me, I want 100% returns each year, but not if they are based on castles in the sky from the past 12 years.

Don't hate this time period. If you have a long-term outlook (10+ years), embrace this time and buy more when you feel comfortable. Personally, I am waiting for a larger drop from this level before I get back in. But trust me, I still had equities 15% ago. I can always be wrong, but one thing I know is that markets over correct to both the up and down. We were oversold up to March 2009, and then we were overbought until last month. Now it's time to see where we go from here.

Do we do another trip down to 6500 on the dow and 667 on the S&P?  I know you hate to read it, but history shows that that's very possible. Either way, if you can't stomach this, try to realize why you invest and go from there. Sleeping at night is always better than any money you can make.