Fisher Investments' Founder Identifies the Difference Between a Correction and a Bear Market

Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher discusses the differences between a short-term correction and a longer, conventional bear market. Recognizing the characteristics of each can help you navigate markets more successfully.

A correction is a sharp market drop of 10-20%, typically fueled by scary-sounding news headlines. In a correction, Ken says, markets typically bounce back as quickly as they declined when reality proves better than feared. A bear market, however, is a sustained market decline exceeding 20% with a rolling start (compared to a correction’s nosedive). Ken says the best thing investors can do during corrections is to exercise patience and discipline. No one can consistently time corrections and timing one wrong can have a dramatically negative effect on a portfolio.