--- title: 3 Steps to Take During a Stock Market Correction description: Is this the start of a stock market correction? Here are 3 actions you should consider taking during a market correction. image: https://www.letsassemble.com/hs-fs/file-2475579377-png/images/Possibility-Stock-Market-Correction-2014.png --- [![Assembly Wealth](https://www.letsassemble.com/hs-fs/hubfs/Assembly/logos/Assembly-Wealth-Logo-Orange-500px.png?width=300&height=70&name=Assembly-Wealth-Logo-Orange-500px.png "Assembly Wealth")](https://www.letsassemble.com/) The Money Manager People TM [800-541-7774](tel:+18005417774) [![RESEARCH MONEY MANAGERS](https://no-cache.hubspot.com/cta/default/10700/7ecbcb66-3fbb-41e3-b219-c24fb3c769c5.png)](https://cta-redirect.hubspot.com/cta/redirect/10700/7ecbcb66-3fbb-41e3-b219-c24fb3c769c5) [![Client Center](https://no-cache.hubspot.com/cta/default/10700/8691dcb4-caa3-42c2-a810-77b59f461fd2.png)](https://cta-redirect.hubspot.com/cta/redirect/10700/8691dcb4-caa3-42c2-a810-77b59f461fd2) [Home](https://www.letsassemble.com/) WrapManager's Wealth Management Blog When life changes, we can help you thoughtfully respond. [< Back to read another post](https://www.letsassemble.com/wealth-management-blog) # 3 Steps to Take During a Stock Market Correction Posted by [ Seton McAndrews | CFP®, Vice President Investments](https://www.letsassemble.com/wealth-management-blog/author/seton-mcandrews) August 8, 2014 - [Tweet](https://twitter.com/share) For all the talk there’s been over the last two-plus years of a looming stock market correction, one has yet to take hold. The S&P 500 had a banner year in 2013, is up this year +4.15% through August 1,1 and has been in a fairly steady climb since 2012. For two years, the market has resisted a correction in the 10% - 20% range.2 In July, however, the S&P 500 posted its first monthly loss since January, and on July 31 saw its biggest point drop since April.3 It’s possible this weakness marks the beginning of a stock market correction, though no expert can know with certainty. What we do know, however, is that corrections are a normal part of bull markets, and there are steps you can take when one occurs. ### What to Do During a Stock Market Correction Corrections are generally defined as relatively short-lived pullbacks in the market in the 10% - 20% range, something we haven’t seen since the summer of 2012. As you can see below, over the last 34 years the market experiences average intra-year declines of -14.4%. ### Past Stock Market Corrections and Declines (Click chart for larger version) [![What to Do During a Stock Market Correction](https://www.letsassemble.com/hs-fs/file-2475579377-png/images/Possibility-Stock-Market-Correction-2014.png?width=350&name=Possibility-Stock-Market-Correction-2014.png "What to Do During a Stock Market Correction")](http://www.wrapmanager.com/images/uploads/pdfs/Possibilty-Stock-Market-Correction-2014.pdf) *Source: Standard & Poor’s, FactSet, J.P. Morgan Asset Management. Returns are based on price index only and do not include dividends. Intra-year drops refers to the largest market drops from a peak to a trough during the year. For illustrative purposes only. *Returns shown are calendar year returns from 1980 to 2013 excluding 2014 which is year-to-date. Guide to the Markets – U.S. Data are as of 6/30/14.* If a market correction does take hold, here are three things you should do: ### 1. Review Your Portfolio Strategy with Your Financial Advisor Ask your financial advisor how your [investment plan is positioned to handle a stock market correction](https://www.letsassemble.com/wealth-management-blog/can-your-investment-plan-handle-the-markets-ups-and-downs). In many cases, having a properly diversified portfolio is the most useful tool to reduce volatility when it sets in. For example, your portfolio could feel some cushion if your fixed income and dividend-paying stock allocations don’t feel the sting of a correction as much as the broader markets and your other investments. ### 2. Turn Off CNBC! Financial news outlets are a great source of daily information for the markets, but it’s also fair to say that the media thrives on volatility. It’s possible that these types of outlets’ viewership increases when the markets show signs of correcting as people look for information, so there’s incentive to sensationalize news stories. This can make investors emotional about the direction of the market and how it could affect their investment portfolios, and increases the likelihood that an investor will make a knee-jerk decision – one that could hurt them. The founder of Vanguard Funds, John Bogle, was trying to help investors [avoid these types of emotional decisions](https://www.letsassemble.com/wealth-management-blog/enjoying-retirement-5-reasons-to-turn-off-cnbc) when he said, “Don’t be captivated by the siren song of the market,” adding that “impulse is your enemy.”4 We couldn’t agree more. ### 3. Consider Tactical Money Managers for Your Portfolio These types of money manager strategies take a risk-managed approach to investing – seeking to capture upside in the market during good times while also maintaining the ability to move to cash should the market experience a prolonged decline. In other words, they aim to give investors a better risk/reward relationship with a focus on downside protection. One such tactical money manager, [Newfound Research](https://www.letsassemble.com/money-manager-research/newfound-research-llc), approaches investing through a risk-managed framework and seeks to limit significant capital loss for their investors.5 Newfound applies their strategy across multiple investment styles such as small cap, global, and risk-managed income. If you would like to learn more about them and how they might fit into your overall portfolio, [click here to request more information](https://www.letsassemble.com/money-manager-research/newfound-research-llc). One of our Wealth Managers can help you. ### Is Your Portfolio Positioned for Whatever Market Conditions Are Ahead? Now is a great time to review your portfolio strategy to see if it could weather the potential effects of a market correction, and to make any needed adjustments. One of our Wealth Managers can run a detailed analysis of your portfolio for you, and can make suggestions for how you can improve your investment plan. For starters, if you do not yet have a tactical money manager in your plan, we can also give you more information on how they work and which money managers we are currently recommending. Give us a call today at 1-800-541-7774 to get started, or if you prefer to start a conversation with us over email, send a note to [Wealth@wrapmanager.com](mailto:wealth@wrapmanager.com). [![Like What You've Read? Subscribe Here!](https://no-cache.hubspot.com/cta/default/10700/5ce6db8c-6757-43bb-831d-b67f40d96a4c.png)](https://cta-redirect.hubspot.com/cta/redirect/10700/5ce6db8c-6757-43bb-831d-b67f40d96a4c) [![Seton M. McAndrews Certified Financial Planner](https://www.letsassemble.com/hs-fs/file-2461887763-jpg/images/seton_mcandrews_newsletter.jpg "Seton M. McAndrews Certified Financial Planner")](https://www.letsassemble.com/wealth-management-advisors/seton-mcandrews)* By **[Seton M. McAndrews, CFP](https://www.letsassemble.com/wealth-management-advisors/seton-mcandrews)******[®](https://www.letsassemble.com/wealth-management-advisors/seton-mcandrews)*** *Seton is a CERTIFIED FINANCIAL PLANNERTM professional and Vice President of Investments at WrapManager, Inc.* --- Sources: 1 [S&P Dow Jones Indices](http://us.spindices.com/indices/equity/sp-500) 2 [JP Morgan Asset Management](https://www.jpmorganfunds.com/cm/Satellite?UserFriendlyURL=diguidetomarkets&pagename=jpmfVanityWrapper) 3 [Reuters](http://in.reuters.com/article/2014/07/31/markets-usa-stocks-idINL2N0Q62P520140731) 4 [CBS News](http://www.cbsnews.com/news/john-bogles-10-rules-of-investing/) 5 Newfound Research                       [![](https://no-cache.hubspot.com/cta/default/10700/358b2f69-d2a8-4560-aa07-ce456edba435.png)](http://cta-redirect.hubspot.com/cta/redirect/10700/358b2f69-d2a8-4560-aa07-ce456edba435)                 [Investment Planning](https://www.letsassemble.com/wealth-management-blog/topic/investment-planning) [Stock Market Corrections](https://www.letsassemble.com/wealth-management-blog/topic/stock-market-corrections) [Downside Strategies](https://www.letsassemble.com/wealth-management-blog/topic/downside-strategies) ### Subscribe to Updates [Subscribe to RSS Feed](https://www.letsassemble.com/wealth-management-blog/rss.xml) [![New Call-to-action](https://no-cache.hubspot.com/cta/default/10700/ffe2a394-957b-481b-9f80-4ef176bd6aaf.png)](https://cta-redirect.hubspot.com/cta/redirect/10700/ffe2a394-957b-481b-9f80-4ef176bd6aaf) ### Most Recently Published ### Blog Authors [![Gabriel Burczyk](http://www.wrapmanager.com/hs-fs/hub/10700/file-2347381761-jpg/Athors_Avatars/Gabe-avatar.jpg "Gabriel Burczyk")](http://www.wrapmanager.com/wealth-management-blog/author/gabriel-burczyk) [**Gabriel Burczyk,**](http://www.wrapmanager.com/wealth-management-blog/author/gabriel-burczyk) [Founder & CEO](http://www.wrapmanager.com/wealth-management-blog/author/gabriel-burczyk) [![Valerie De Vol](http://www.wrapmanager.com/hs-fs/hub/10700/file-2457588837-jpg/Athors_Avatars/Valerie-De-Vol-avatar.jpg "Valerie De Vol")](http://www.wrapmanager.com/wealth-management-blog/author/valerie-de-vol) [**Valerie De Vol, **IACCP® Chief Operating Officer](http://www.wrapmanager.com/wealth-management-blog/author/valerie-de-vol) [![Seton-avatar.jpg](http://www.wrapmanager.com/hs-fs/hub/10700/file-2344519198-jpg/Athors_Avatars/Seton-avatar.jpg "Seton-avatar.jpg")](http://www.wrapmanager.com/wealth-management-blog/author/seton-mcandrews) [**Seton McAndrews, **CFP® ](http://www.wrapmanager.com/wealth-management-blog/author/seton-mcandrews)[Vice President - Investments](http://www.wrapmanager.com/wealth-management-blog/author/seton-mcandrews) [![Doug Hutchinson](http://www.wrapmanager.com/hs-fs/hub/10700/file-2347381751-jpg/Athors_Avatars/Doug-avatar.jpg "Doug Hutchinson")](http://www.wrapmanager.com/wealth-management-blog/author/doug-hutchinson) **[Doug Hutchinson,](http://www.wrapmanager.com/wealth-management-blog/author/doug-hutchinson) **[CFA® ](http://www.wrapmanager.com/wealth-management-blog/author/doug-hutchinson)[Director of Research and Trading](http://www.wrapmanager.com/wealth-management-blog/author/doug-hutchinson) ![Katie - square.png](https://www.wrapmanager.com/hubfs/Katie%20-%20square.png "Katie - square.png") [**Katie O'Connor **Director of Client Services](https://www.wrapmanager.com/wealth-management-advisors/katie-oconnor) **Important Disclosure Concerning WrapManager Blogs** Blogs found at this site have been created or supported by WrapManager. The information provided in a blog post prepared by WrapManager or an associated person of WrapManager is generally limited to financial and economic issues, but may include a discussion of general interest items. The views and opinions expressed on this blog are purely the blog authors, and not necessarily those of WrapManager, Inc. Certain blog posts include information pertaining to WrapManager’s investment advisory services and the products and services of unaffiliated money managers. Such information is provided for information purposes only. Accordingly, information provided in a blog should not be construed by any consumer and/or prospective client as a solicitation to effect or attempt to effect transactions in securities or the rendering of personalized investment advice. Any subsequent, direct communication by WrapManager with a prospective client shall be conducted by a representative of WrapManager. Moreover, no client or prospective client should assume content contained on the website serves as a substitute for personalized advice from WrapManager. Different types of investments involve varying degrees of risk, and there can be no assurance that any investment, portfolio or money manager referred to within the blog will be suitable for your individual situation and risk tolerance or will be profitable. WrapManager recommends that you retain a financial professional to provide you with specific guidance regarding your financial situation before investing. Investment in equity strategies involves substantial risk and has the potential for partial or complete loss of funds invested. Although the information included in the WrapManager, Inc. website and blog has been obtained from sources WrapManager believes to be reliable, we do not guarantee its accuracy and information may be subject to change without notice. This website should not be regarded as a complete analysis of the subjects discussed. Information on this site should not be relied upon as a substitute for legal, tax or accounting advice by a professional in your local jurisdiction. Comments made by third parties are subject to moderation by WrapManager and may not appear on this blog until they have been deemed appropriate for posting. Also, due to the volume of comments received, not all comments will be posted. WrapManager does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party website linked to WrapManager's web site or incorporated within a blog post. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.     ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Seton McAndrews", "url" : "https://www.letsassemble.com/wealth-management-blog/author/seton-mcandrews" }, "datePublished" : "2014-08-08T21:30:00.000Z", "headline" : "3 Steps to Take During a Stock Market Correction", "image" : [ "https://www.letsassemble.com/hs-fs/file-2475579377-png/images/Possibility-Stock-Market-Correction-2014.png" ], "mainEntityOfPage" : { "@id" : "https://www.letsassemble.com/wealth-management-blog/3-steps-to-take-during-a-stock-market-correction", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://www.letsassemble.com/hubfs/Assembly/logos/Assembly-Wealth-Logo-Orange-500px.png" }, "name" : "Assembly" } } ```