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A decline of 10% or more in the price of a security or market index from its most recent peak.
Corrections are a normal part of market cycles and occur roughly once per year on average. They differ from bear markets, which require a 20% decline. Corrections are often triggered by economic data, geopolitical events, or shifts in monetary policy. While uncomfortable, they serve a healthy function by resetting overstretched valuations. Many long-term investors view corrections as buying opportunities. The average correction takes about 4 months to recover, compared to over a year for bear markets.