A Better Way to Tell a Correction from a Bear Market?
The standard definition of a correction is a 10% market decline, while a bear market is a 20% decline. These are simple definitions ... I take a different view.
At Cornerstone, we view a correction as a significant decline within an up trend. The key here is that the up trend continues after the correction is over. Two examples are the crash in 1987 and the correction of 1990. In both cases, the market fell 20% or more, yet they recovered quickly and the up trend continued.
As you can see in the chart
