The word “correction” has been used more than usual on CNBC and other business news programs this week. At first, it seemed to make sense; after all, on Monday, the S&P 500 dropped by 3.4%. Then on Tuesday, it shed another 3.03%. By the market close on Tuesday, the broad index was down a total of 7.6% from its all-time high – the all-time high was less than a week earlier!After a 28.9% run-up in value through 2019, then occasional pauses for significant events such as the exchange of fire between the U.S. and Iran, we continued to experience equities breaking new ground as buyers' optimism remained high. A quick Google search uncovers stories from most major outlets that report on the stock markets wrote an article warning of the “The Next Correction” or “How to Recognize a Correction” over the last six months. Ignoring these warnings, the market continued to trade higher.The trend toward higher levels seems to have finally been derailed. But, the word “correction” as it has been used historically, may not fit the dramatic shift in direction the past few days. The market move is much more likely to fall in the category of a “black swan event.” The distinction is worth understanding in that the reasons for the decline in market prices are different. It’s important to understand the nuances as the recovery from each is different. Read More >>