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How to Turn Market Corrections Into Buying Opportunities
Buy great companies at lower prices
Market corrections can feel scary. But for smart investors, they are actually moments filled with opportunity. When stock prices fall, it can be the best time to buy great companies at lower prices, like getting a good deal at a store! In this article, we’ll walk through everything you need to know about turning a market correction into a smart buying opportunity.
What Is a Market Correction?
A market correction happens when a stock index, like the S&P 500 or the Nasdaq, falls by 10% or more from a recent high. Corrections are normal and healthy. They usually happen because investors get nervous about something, like rising interest rates, a war, or a slowdown in the economy.
Corrections aren’t the same as crashes or recessions. Most corrections only last a few weeks or months. They help “cool off” markets when prices have gotten too high, too fast.
Why Corrections Create Good Buying Opportunities
Corrections lower the prices of good stocks, even when nothing is wrong with the company itself. Sometimes people sell simply because they are scared, not because the businesses are doing badly. This creates a chance for smart investors to:
