A reminder that corrections are normal in the context of a bull market and normally appear about every 18 months. This time it has been nearly four years so we have been over due. Corrections are defined as a pullback of 10% from a high. Since 1900 the market has fully recovered from a correction within about 10 months.  Most corrections do not become bear markets and every single one of them, historically, has been a great buying opportunity looking in the rear view mirror.

During the post-war period, bull market rallies between corrections have an average gain of about 32%.  This is a time to stay calm and not make emotional decisions.  The natural aversion to loss can cloud judgement.

2Q profits have largely surprised to the upside and there are many signs the domestic economy is improving.  When there has been a tremendous spike in volatility and no clear catalyst for the selloff,  history shows that buying is a winning strategy. We believe stocks may well be “on sale.”  The basic fundamentals have not changed and, though volatility will persist for a while, we remain bullish intermediate to longer term.