One of the most comical U.S. stock market events so far in 2014 was the correction that took place not long after the start of the New Year. It wasn’t the fact that stocks dropped by -6% over eight trading days in late January and early February. There’s really nothing funny or even notable about that. Instead, it was the severe investor reaction to what was a generally short and shallow decline in stocks. It spoke volumes about how ill prepared the market is to endure any type of pain. And given the fact that the Fed is unlikely to ride to the rescue with another heaping of stimulus the next time the market falls into a sustained correction, it is worthwhile for investors to begin putting into perspective now what a real stock market correction might actually look like once it arrives.
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