Trying to predict the next market correction? Barry Ritholtz has some advice for you: Don’t.
In a Bloomberg View column, Ritholtz lists off the litany of events that were supposed to cause a correction over the past couple years but didn’t, ranging from governmental problems to geopolitical woes to valuations. “Today’s weak futures are blamed on the threatened U.S. airstrikes on ISIS, dragging America into another Middle East war,” he says.
“But is that what is driving the markets?” he asks. “Probably not. The simple reality is that corrections come along on a regular basis, and for reasons that are undecipherable or indeterminate. This is the way it is and always has been. Anyone who tells you he can predict when a 5 percent or even 10 percent correction is going to start and end, and do so with any degree of consistency, has something very expensive and mostly worthless to sell you.”
So accept that corrections will occur, and that you won’t know exactly when and why they do, Ritholtz says. “Corrections happen,” he concludes. “Get used to it.”