How often does a correction in the stock market turn into a recession?

Question

I'm interested in "leveraged indexes" (ex., SSO) that imitate the general movement of the stock market with increased power. However, if the market plummets, I'm twice as in trouble as I'd normally be.

I know that predicting the market is a difficult if not impossible task, but are there any early "warning signs" to warn me of an upcoming recession?

Historically, how many times have corrections (10% drop in the market) turned into a true, full-blown recession (20% drop or more in the market)?

Thanks for your help!

Correction: By "recession" I meant a bear market. Sorry for the confusion of terms.

Answer 1

If you buy the futures instead of the ETFs you can get an even better exposure if leverage is what you're looking for.

First of all, stock market and recessions are separate.

Recessions means that the GDP has shrunk for 2 straight quarters.

Stock market crashes come for many different reasons, that if people knew they could make millions :) Basically at some point it gets out of hand(like China) and it crashes.

My opinion about the matter is twofold:

1. you don't need leverage. Leverage is for those who know what they're doing. What you need is capital protection.
2. We've had a 4-5 year bull run and it might look like it's run out of steam. The next month is key and even then it won't last forever.

Answer 2

If you want to invest in the stock market with leverage, you should invest in DIA options instead. That gives you much much more leverage BUT completely no risk if the stock market should plummet into a bear market by using a strategy we call a Short Bull Ratio Spread. Please see full details at http://www.optiontradingpedia.com/free_short_bull_ratio_spread.htm

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Answer 3

According to the "rules" the market will correct between 0 and 147 times in a specific time allocation. There is no way however to judge the time formula. Then when it comes to a 20% drop.... most professionals get killed in them also. A 20% drop means you have to earn 40% to break even.

Make this a small part of your "asset allocation", add a "stop loss" and you may or may not do well.

Answer 4

Bad move stevie. The correction we had in late feburary has not gone to recession. If you risk it no more than 5% of your TOTAL portfolio should be in this high risk venture.

Answer 5

For starters seem up Peter Schiff on line. he's an incredible economist. additionally seem him up on youtube. 2d, the tax rebate you ought to get is money you ought to rfile as earnings next year. in case you have credit comeing ot you next yea rin the quantity of say 1200 and you acquire 900 as a tax alleviation verify then next year once you do your taxes you in elementary terms get 3 hundred credit! They supposedly don't have the data of a "recession" yet as a results of fact they seem for the numbers of enhance to be down for a certian type of quarters and that ha snot been shown yet by the governments nuumbers. it incredibly is pretend records thogh so take it with a grain of salt. If the government. reported records the comparable as they did in 1920's and 30's I assure it could tutor we've been in a recession already. And in case you spot in simple terms like all different poste rcommented the charges of milk, gas, bread, and so on whilst in comparison with what the conventional worked makes is quite intense. this could't be sustained. Ben Bernake "the fed" dropped the fast term lending fee he supplies ot bansk back. His chum Alan Greenspan did this for some years. This drops what the greenback is worth and then different countries money will become worth better than ours. it incredibly is a demonstration of inflation as a results of charges dropping. additionally, yet another extensive type the government.now fakes is the unemployment fee. The activity losses in February on my own are magnificent. shops are remaining each and every the place you swap. The reaons they are asserting the value is low is that peopel quit working. you're gonna see that there will be much less youngsters working becuase they are going to be the 1st to in elementary terms quit searching for artwork. I undergo in strategies it being frustrating fo rme to locate a job whilst i replaced into youthful reason the activity industry replaced into tighter back then. the government. in elementary terms counts human beings receiving unemployment checks as being unemployed. as quickly as peopel quit working and quit looking they do no longer seem to remember anymore. I guess this replaced into differnet back interior the day (ie 20's 30's) in any case, it incredibly is starting to be greater than i wanted it to yet once you seek on Peter Schiff you will see. additionally, there is various tlak approximately stagflation like we had interior the 70's. I peronally think of we shoudlall be waiting for yet another large depresison and that i'm uncertain if it's going to be worse yet i think of it's going to be. no longer adequate aspects on earth for the intake that occurs daily.