Business Owners Urged to Brace for 25th S&P 500 Correction Pattern as Stocks Stay Up 12%
Updated
Updated · Entrepreneur · Aug 19
Business Owners Urged to Brace for 25th S&P 500 Correction Pattern as Stocks Stay Up 12%
1 articles · Updated · Entrepreneur · Aug 19
Summary
Business owners are being told to prepare now for an eventual market contraction by diversifying assets, building cash reserves, securing credit lines and using wealth managers.
The warning rests on history: the S&P 500 has dropped more than 10% on 25 occasions in 50 years and more than 20% six times, even as the S&P 500 and Dow are both up over 12% this year.
A selloff can quickly hit companies beyond portfolios, with customers delaying purchases, banks tightening lending, investors turning cautious and employers postponing hiring and capital spending.
The advice is to lock in financing before banks pull back, keep most equity exposure in broad funds rather than speculative single stocks, and hold cash to buy quality shares after a decline.
The broader message is that contractions are portrayed as cyclical and survivable—2009's roughly 54% Dow plunge was followed by a recovery that left the index more than eight times its low.