At this point GWM Model portfolios are holding only gold, which has begun to show signs of life, and bond and flexible income investments. We are very defensive at the moment.
Better than 70% of the time, the market safely recovers from a correction that is limited to 8% or less. When a correction exceeds 8%, as it has now, it is really anybodies guess as to how much further the market could decline. A confirmation of increased bearishness would be a sharp rise in volatility; strangely enough volatility, as measure by the VIX index, remains relatively low.
Ian Woodward, market analyst and HGSI mentor, provided our group with the following historical study. It gives us the odds for various percentage corrections. It is a 35 years study of past corrections.
(Click on charts for easier viewing.)
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Percentage Corrections over 35 Years
|Analysis by Ian Woodward|
The market should bounce later this week. If it does not we have trouble right here in River City.
This blog post does not constitute an offer of investment advice. This blog is only provided for educational purposes. Please read the Important Blog Disclosure posted in the right channel bar.