Price volatility increases during corrections
Volatility during a correction rises exponentially. Daily traded volumes frequently go through the roof during this period. This happens because many investors panic. They fear a prolonged bear market that will only worsen, while others believe the decline is a temporary blip and increase their buying.
From an investor’s perspective it is vital to gauge the broader market indicators, look at the corporate earnings and employment data, general consumption trends, and then make an educated call as to whether to join the selling frenzy during a correction or instead to buy fundamentally sound stocks at discounted prices.
