Concerning Economic Signals Point to Potential Market Correction Ahead, Though Historically Downturns are Temporary
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The Conference Board Leading Economic Index (LEI) has never been wrong when forecasting a recession when it declines by at least 4% on a year-over-year basis. The LEI is currently down 7%.
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The S&P 500's Shiller P/E ratio is above 30, which has historically been followed by bear markets and 20-89% drops in the S&P 500.
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While concerning economic indicators point to potential trouble ahead, stock market corrections and recessions are normal parts of the economic cycle.
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Bear markets historically last less than a year on average, while bull markets last much longer - over 1,000 days on average.
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Every 20-year period of holding the S&P 500 has produced positive total returns, underscoring the power of long-term investing.