Many agree the market is needing a correction in part to the banner performance of major U.S. indexes in 2013 but also because of the amazing run the market has had for the last few years. Some believe what we experienced at the end of January was a correction, it might have been. Technically a correction occurs when an index falls 10% or more from a recent high. Major indexes had only fallen about 7% from their highs during the January/February slump.
We may need more of a correction to really give the market room to grow. In fact some analysts believe that we need a deeper correction before summer if we are to have any significant positive gains for the year.
Now this chart I mentioned shows the Dow in its recent pattern compared to its pattern leading up to the Great Depression. The charts pattern was first pointed out by Tom McClellan of the McClellan Market Report back in November of 2013. The scary part is that neither of the charts have had their time lines stretched or shrunk to match each other, they are simply laid on top of each other.
There has been many who have come out to put down the chart noting some legitimate reasons we are not headed for another Great Depression type market. Some of the reasons many don't believe this chart has any significance are that companies are sitting on record amounts of cash, their profits are growing, and stock valuations are not nearly as high as they were 85 years ago.
However, defenders of the chart have come out in large numbers. Some of the reasons they want us to take notice are in 1929 the US Federal Debt was $17 billion and today it is about $17 trillion. China had very little significance in the world but today own a large portion of U.S. debt. in 1929 the U.S. was an exporting country and today imports nearly everything including about 35% of its oil.
There are arguments on both sides of this chart, we will let you decide how you feel about this chart. Our team is continually looking at ways to protect our clients form market downturns and swings in the economy. If you would like to see our unique strategies and insights reach out to us at 916-509-7227 or at www.aaronmatthewsfinancial.com
Matt Golab was recruited to write a chapter in Tom Hopkins recent book, Victory which became a National Best Seller. Matt also received the Editors Choice Award for his contribution to Victory, not every contributor is selected for this high honor.
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Golab is the Author of The Consumer's Guide to Planning Your Retirement: Your Guide to Mental Peace and Financial Well Being. Matt Golab continues to expand the geographic reach of his audience and desires to bring his expertise to a nationwide television audience. Matt emphatically states his mission, “I want to change the way Americans view their retirement. They can succeed (stay retired) regardless of what happens in the market". Contact information for Matt is available at his website,
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