Volatility Makes Correction Feel Worse Than It's Actually Been

Three. That is how many times the MSCI World Index has tested a low during the autumn spurt of this year's correction. With such jarring moves, we would forgive you for thinking the correction is worse than its peak-to-trough -11.0% decline.[i] Grinding moves punctuated with big swings have a way of looming large emotionally. Financial headlines seem to be feeling the blues, with many warning this could be the tip of the iceberg. Yet to us, this volatility still looks like a correction, not a bear market—and therefore not a time to flee stocks. One telltale sign, in our view, is the notable deterioration in various sentiment gauges.