Markets experience both short-term declines and severe collapses. Knowing the difference helps investors make strategic decisions.
**Market corrections**
– Occur regularly.
– Often last weeks to months.
– Examples: S&P 500 corrections in 2011, 2018, and 2022.
**Market crashes**
– Rare but destructive.
– Can lead to recessions.
– Examples: 1929 Great Depression, 1987 Black Monday, 2008 crisis, 2020 COVID crash.
**How investors should react**
– In corrections: stay calm, focus on long-term goals.
– Long-term investors recover.
**Key differences**
– Crashes are severe and disruptive.
– Corrections reset markets.
– Crashes are rare events.
**Conclusion**
Corrections and sow good stock crashes are inevitable in investing. By understanding them, investors position for recovery and growth.
