Correction vs Market Crash (1)

17 февр. 2021 г.

My definition of Correction:

During any rally whether it is Bullish or Bearish, there are times when traders and investors start to reevaluate their positions, take some profits or accept their loss and make changes in their portfolios composition. Usually it happens a couple of time during any rally regardless of its nature(Bullish/Bearish).

My definition of Market Crash:

Any bullish rally almost always leads to a Bubble formation and a major catalyst (election, wars, pandemics..etc) is going to burst the bubbles! Most asset classes experience a sharp decline in value during market crash and it is usually more than 30%.
But the real reason behind any market crash is not the difference between market values and intrinsic value of the asset class. In my opinion it is the change in the view of most investors for the outlook and future of that asset that cause the crash.

To wrap it up, compare the next 1-4 year outlook we have with the situation we experienced in 2020.

To be continued...
Moshkelgosha