Crashes vs. Corrections

I’m going to be blunt here…

The past two weeks in the market have been harrowing.

First, precious metals took a dive. And last week it was tech’s turn in the barrel.

Still, a cursory glance at the headlines would lead one to believe it’s 1929 all over again.

It’s not.

What we’ve just witnessed is not a crash; it’s a healthy correction.

In fact, with respect to precious metals, we’ve already seen a bounce back.

After tumbling 16% in just two days gold prices have come back up about 8% — from a low of roughly $4,500 an ounce to more than $4,800 an ounce.

To give this further perspective, gold started the year around $4,600 per ounce and at this time last year it was below $2,900.

That’s not a crash. That’s a correction — and a mild one at that.

Now, turning to tech…

As of this writing the Nasdaq is somewhere around 22,500.

There’s panic all across the headlines because, apparently, AI has made software obsolete.

But the Nasdaq was still 500 points lower as recently as November. And it’s up 14% in the past year.

Again, not a crash.

I think this perspective is important — not just for you, dear reader, but for myself.

Because as a financial analyst I dissect the market every single day. I hyperfixate on my portfolio positions and often ask myself by the minute what I should buy and sell.

So spending two weeks staring at red numbers can be disheartening. It can induce panic. And that’s why, in moments like these, I steel my nerves and buy more.

That’s what I’m doing now. Because when I look at this sell-off, I don’t see much behind it.

I’ve seen a few explanations at what’s driving it — and none of them really add up.

Precious metals supposedly fell because President Trump’s choice for Fed Chair is a hawk. Again, I covered this last week, but I’d be positively shocked if rates weren’t significantly lower by the end of the year.

Meanwhile, tech stocks crashed because an AI tool for legal work spooked Wall Street. But this sidesteps the fact that no tech or software firm has missed badly on earnings and attributed that loss to AI.

In other words, the fear that AI will erode vast portions of the economy is real, but the evidence isn’t.

I’ve also seen speculation that both of these dives were driven by crypto traders selling their profitable investments to cover for Bitcoin losses.

Indeed, Bitcoin has lost almost half of its value since October.

So that could well be the case.

I think we’d all also do well to remember what happened last year.

Remember when the S&P dropped 12%in the span of a week last April?

That was the result of Trump’s tariff policies going into effect. And while those tariffs have caused some hiccups, the massive economic collapse they supposedly presaged never occurred.

It ended up being just another buying opportunity.

And until I see some real, tangible evidence of a crisis, that’s what this is.