Technically (put quotes around that if you like), a "correction" is a 10%-ish decline in the stock market indices.

We're now down 20%+ on the small-cap SP-600 US index, so small company stocks are crossing into "bear market" territory. More than half (like 53 to 54%) of the SP500 component stocks are down 20%+ this year. The worst-hit sectors are energy, materials and financials. The indexes (DJI, SP500, NASDAQ) have remained cheerier than lots of stocks below the headlines because of the valuation and persistence of the "FAANG" (Facebook, Amazon, Apple, Netflix, Google) stocks.

How far will equities go down? Who knows. I learned 15+ years ago to not worry about predicting what/when the market is going to do, but rather, I worry more about "having a plan for when the market does XYZ" and then having the resolve to execute on that plan when "the market does XYZ." I learned this after realizing that about every eight to 10 years, Wall Street decides to have a panic, run around in circles, screaming like their hair was on fire.


As for "does this get better/worse?" I don't know. What I can say from observing the "professional" traders/investors this year is that "nothing is working." By this, I mean that I'm not seeing a hedge fund with a "thesis" that is returning them outsized gains.  In 2007/2008, there were hedge funds who smelled the rot in the mortgage and banking sector, they laid on trades expecting the blow-up (ie, they had a thesis that banking and real estate were going to blow up), and they enjoyed wild profits. This year, I'm not seeing a fund who is able to claim "We called this right when everyone else has been wrong!"

Several large investment banks are reporting that the majority of their assets are having negative performance. We've seen 450+ hedge funds close up shop this year, and while there are always hedgies who close up every year, this year has seen a number of established, formerly profitable funds, throw in the towel, return money to investors and close up shop. This is following last year, which was the best year for hedgies in some time.

One of the issues with this stock market is that, coming into this autumn, stocks were, by historical standards, quite richly valued. The price:sales and other valuation metrics were quite a bit higher than long-term averages. 

We have seen a couple of days since early November where the market action reflected the wholesale dumping of positions to conform to margin requirements.  It isn't like 2008 (at this time), where we saw everything being hurled into the market for sale to raise cash. This decline, while tracking the 2008 downturns fairly well in percentage terms, isn't exhibiting the wholesale panic we saw in 2008.

So what was my "trigger point" for this go-round? Signs that the Fed is going to deliberately cause a recession. This past week's Fed announcement shows that the Fed is wed to their dogma, and the market wanted to see some moderation of the Fed's theories about employment and inflation. No such moderation was seen, so this is the point where I'll short the markets and individual stocks until something changes...