Money Monday




Topic A

As you may have heard, the stock market officially hit "correction" territory last week. So we want to give a few definitions so you can better understand what's going on. 

What's a bull market?: When stock prices are rising. U.S. stocks have been in a bull market since March 2009, the second-longest in history. During this period, stocks have more than tripled in value.

What's a correction?: A market drop of at least 10% from a recent high, which typically occurs about once a year, but hadn't happened for long time, until now. The last we one we had occurred in February 2016.

What's a bear market?: When a stock or market index falls 20% or more. The stomach-churning drops on over the last week haven't even come close.

What's volatility? How much a stock or the market fluctuates in a period of time. Markets have been volatile recently, with massive sell-offs Friday, Monday and Thursday, and wild intraday swings in between. On Simply Money, we like the word "turbulence."

So since we're still close to "correction territory," here are some things to consider:

First and foremost, corrections are normal. And they're more common than you realize. Including the current correction, the S&P 500 has undergone 36 corrections of 10% or more, when rounded to the nearest whole number, since 1950. That's pretty much one every  1 1/2 years to two years.

Declines every now and then are both healthy and common for stocks.

Everything is relative: Seeing the words "historic plunge" in headlines is enough to poke at the nerves of any investor. However, those "historic plunges" in the Dow have only erased a combined 10% in value, returning the index back to its November 2017 levels.

On a percentage basis, neither of the Dow's 1,000-plus-point drops this week were anywhere close to its 20-worst single-day percentage declines of all time.

Now's a great time to buy: Right now, stocks are on sale! And how about this: Since 1950, bull-market rallies in the S&P 500 have completely erased all 35 stock market corrections, often within a matter of weeks or months.

Stay the course…unless: If you have the proper investment mix for your risk tolerance and your goals haven't changed, there's no reason to panic and sell. But if you've been anxious over the last few days, that's a sign you should have a trusted financial planner look at your investments.


The fact that stocks are near "correction territory" shouldn't be scary. This is normal.


#2: Enquirer

Every Sunday, Simply Money is answering your money questions in the Cincinnati Enquirer.

Eddie: I inherited some P&G stock from my dad who recently passed away. What's my tax obligation going to be?


#3: Retirement

You've worked hard for your life savings. You've worked long hours, probably dealt with horrible bosses, and you may have missed out on some family events. So, as you head toward retirement, be sure you're doing all you can to protect your money. 

Why? Because there are clever crooks trying to scam you. Always were. Always will be!  And with the internet, it’s increasing. So protect yourself by learning to recognize the four common traits of the criminals running these scams.

One of the most well-known Ponzi schemes was run by Bernie Madoff ($65 billion in fraud)… but these hit closer to home as well. Last year, a Warren County man stole $70 million from his 480 clients. A few years ago, Glen Galemmo from Walnut Hills defrauded his clients for $34 million.

And most of the time, these victims are just like you and me. Modest savings, just looking for help investing it. This can happen to anyone if you're not careful.  So here's what to look for:

Custody of money: Never allow any investment decision-maker to literally get their hands on your money. People running Ponzi schemes want it so they can slip it out the back door, and they will, immediately. Your money should be invested with a third party custodian, like an Edward Jones, Fidelity, or Vanguard. At Simply Money Advisors, our third party is TD Ameritrade. Never make out a check to an individual!

No bad years: Even the best investors, like Warren Buffett, have nasty years whose visibility demonstrates integrity. The crooks behind Ponzi schemes reveal no bad years. Bernie Madoff claimed consistent 10% - 12% returns for decades. That doesn't happen.

Lots of jargon: If you can’t understand in simple English, run. This cycle's hot innovation is phony Bitcoin jargon, over 1,700 of these ponzi schemes.

"Affinity:" Most Ponzi schemes target the five Cs: churches, charities, communities and country clubs, to gain trust. They start with their own friends and relatives—ultimately left destitute. Trusted referrals mean little themselves. Never invest based on them alone.

Something easy you can do to check out an advisor: go to This will literally take you just a few seconds. If the firm or individual is not listed, run the other way.


Don't think something like this can't happen to you! Always do your homework before investing with anyone.