Market correction: Experts weigh in

We asked our trusted MoneySense columnists to provide their initial reactions and suggestions for investors in light of today’s market correction. Here’s what they had to say…

“Market pullbacks of 10% are not uncommon and in the past 50 years, happen on average approximately once a year. So investors need to expect these sorts of events and ensure that their asset allocation is appropriate at any given time—it probably shouldn’t change in response to the markets or the 6 o’clock news. Market declines are temporary and the one thing that is sure to make them permanent is getting worried and selling based solely on emotion.

I like to point people back to their retirement plans when we talk about these sorts of corrections. If you are not forecast to need your investment capital for the next five years, there’s a slim chance that markets will be lower than today at that time. And in particular, if you’re only going to need income or a bit of capital from your portfolio in the coming few years, it’s important to try not to get too concerned when markets do what they do—ebb and flow.

If you need a sizable amount of capital from your portfolio within the next few years, arguably your asset allocation shouldn’t be overly exposed to stocks in the first place and stock market fluctuations therefore shouldn’t impact you much anyway.

Investors tend to be much more sensitive to market declines as compared to the satisfaction they feel when markets rise. Thankfully, markets go up more than they go down.”—Jason Heath, MoneySense columnist, CFP

“Keep calm and carry on implementing your investment plan that is designed not to crumble at the first hint of a bear market.”—Norm Rothery, MoneySense columnist, CFA, founder of The Stingy Investor

“Rough days like this one are a litmus test for investors. Of course, any sharp plunge is stressful, but if you have a risk-appropriate portfolio and a long-term plan in place, then this is nothing more than a bump in the road. If you feel compelled to sell anything in a panic, then your portfolio is too risky and you need to revisit it, because they are going to be many, many more days like this during your investment lifetime.”—Dan Bortolotti, MoneySense columnist, investment advisor, founder of the Canadian Couch Potato

“Meditation might be as valuable a thing to try right now as oppose a belated attempt to lock the stock market barn after the horse has already escaped.”—Jonathan Chevreau, MoneySense columnist, founder of Financial Independence Hub

“The occasional sharp sell-off is a normal part of what happens in stock markets. The average investor should be invested in the stock market for the long-term and not react by doing anything rash.”—David Aston, MoneySense columnist, CFA