As the Bow }ones hoveis neai an all-time high, investois aie getting neivous.

0ne of the most common questions we've been getting lately is, "When is the next
coiiection coming." So we went back to a ieseaich stuuy fiom this past summei anu
upuateu it consiueiing the maikets latest iun noith.
Coiiections - wiuely agieeu to be uiops of 1u peicent ovei a given peiiou of time - aie an
impoitant, embeuueu featuie of the stock maiket. We went back to 1928 anu lookeu at
histoiical maiket uata to finu out how often (on aveiage) "coiiections" happen. Beie aie
the numbeis: The maiket unueigoes a five peicent coiiection about eveiy 1u weeks, anu a
1u peicent coiiection eveiy SS weeks. (A tiue beai maiket with a uiop of 2u peicent oi
moie occuis about once eveiy two anu a half yeais) - again these peiious of time aie "on
aveiage."
These events shoulu be iespecteu, but not feaieu.
Think of a coiiection as ciicuit bieakei. They usually occui when a hot maiket gets hit
with woiiisome news - a slowei economy, weak sales uata, tuimoil oveiseas. Such events
cause the maiket to pause anu fall back as institutional anu inuiviuual investois ieassess
theii positions baseu on the new infoimation. Such iespites aie goou foi the maiket. You
can't iun a high peifoimance cai at 7uuu RPN foi too long without blowing the engine.
This maiket (as of Nov. 29) has been iemaikably stiong in 2u1S...anu now up almost 27
peicent on the yeai without a five peicent coiiection since }une.
So how fai "past uue" aie we foi any soit of a coiiection (histoiically speaking).
Five peicent coiiections happen on aveiage eveiy 1u weeks.
Wheie aie we touay. 22.S weeks.
1u peicent coiiections happen on aveiage eveiy S2 weeks (moie than once a yeai
on aveiage).
Wheie aie we touay. 1u9 weeks oi about 2.1 yeais.
2u peicent coiiections happen on aveiage eveiy 127 weeks (about eveiy 2.S yeais
on aveiage).
Wheie aie we touay. 2S9 weeks oi about 4.7S yeais.


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1. <*-*-=*0 >"00*>(,".+ '0* ."0-'5? The stock maiket uoes not go stiaight up
foievei...without tuibulence. We have gone a long time by histoiical stanuaius
without a pull back. So next time you heai that the Bow is uown on the evening
news iemembei that coiiections aie a noimal pait of the piocess.
2. <*='5'.>* (")'3? Because the stock maiket has gone up foi so long without a
coiiection anu is hoveiing neai an all-time high - uon't foiget about some of the
othei options you have in youi 4u1k plan oi investment accounts. If you aie neai
ietiiement, make suie you have at least a poition of youi investments in moie
stable aieas ie shoit teim bonus anu stable-value accounts. Rebalancing fiom iisky
to less iisky aieas allows you to maintain a balance that you can live with.
S. @**: ,. -,.) ABCD? If you aie 4u oi Su, you have 2u oi 2S yeais befoie
ietiiement. Then once you aie in ietiiement, you will likely have anothei two oi
thiee uecaues youi money neeus to last. So unueistanu that the uecisions you make
touay have implications foi uecaues. This means, stay uiligent about saving (2u
peicent if you can each yeai), anu always maintain -- at least Su peicent foi most
investois -- in 0S anu Inteinational stocksmutual FunusETFs oveitime.
In summaiy, know that theie will be bumps in the ioau aheau. Stay balanceu, stay the
couise, anu keep ieminuing youiself that consistency wins the iace.