No. of Recommendations: 15

The Stock Market Has Wiped Out Its 2018 Gains. But if You Step Back, It’s Still Riding High.

By STEPHEN GROCER and KARL RUSSELL, The New York Times, DEC. 10, 2018

Worries about global economic growth, trade and the strength of corporate America have been battering stocks. While that’s cause for concern, it is important to put slides like this in context....

In the last 20 years, there have been 10 corrections. Only two turned into a bear market, defined as a decline of 20 percent from its high, amid the recessions that began in 2001 and at the end of 2007. [end quote]

Wall St. Ignored Signs of Trouble for Months. Now It Sees Risks Everywhere.
By Matt Phillips, The New York Times, Dec. 9, 2018

China, the world’s second-largest economy after the United States, is growing at its slowest rate in nearly a decade. The export-driven economies of Japan and Germany — the third and fourth biggest economies in the world, respectively — both contracted in the third quarter.

The United States has so far been an outlier. Thanks in part to a burst of deficit-fueled stimulus, a large chunk from the tax cut, the American economy this year is on track to grow at its fastest pace since 2005. ...

But even in the United States, there are emerging pockets of weakness, particularly in parts of the economy that are sensitive to rising borrowing costs. Pending home sales have declined for eight straight months, as interest rates on 30-year fixed mortgages have climbed. Monthly auto sales have plateaued, prompting job cuts at General Motors and Ford....
[end quote]

There are plenty of risks listed in this article.

The historic perspective shows that the current small correction is common and may not become a concern. On the other hand, the market is overvalued. A few worries may not cause a dramatic drop. But the world economy is riddled with "fingers of instability." It's hard to predict when one will trigger a recession...or even a financial crisis.

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